Three Line Strike

Three Line Strike Candlestick Pattern

In today’s article we will review both the bearish and the bullish three line strike candlestick patterns. These candlestick patterns are secondary to the major Japanese Candlesticks patterns however they are still important to learn to identify.

Bearish Three Line Strike Candlestick

The bearish three line strike candlestick pattern is characterized by a downtrend and consists of three adjacent long black candlesticks followed by a long white candlestick. In order to qualify for this pattern three conditions must be met. First, as previously stated, the market is characterized by a downtrend. Second, there are three long black candlesticks each with consecutive lower closes. Lastly, there must be a white candlestick on the fourth day that opens at a lower level and that closes above the open of the pattern’s first day.

What does the bearish three line strike pattern indicate is occurring in the markets?
When short selling, traders begin to cover their positions on the fourth day of this pattern which causes the prices to move strongly in the opposing direction. If there was a strong bearish trend before this pattern occurred, then the downward direction should continue. Confirmation is required for this candlestick in the form of a black candlestick on the fifth day, or by a lower close, or by a large gap down.

Bullish Three Line Strike Candlestick

This candlestick pattern is characterized by an uptrend in the market and it consists of three adjacent long white candlesticks followed by a long black candlestick. In order to qualify for this pattern three conditions must be met. First, as stated previously, the market is characterized by an uptrend. Second, there are three long white candlesticks with consecutive higher closes. Lastly, there must be a black candlestick that opens at a higher level than the first day, and also closes below the open of the first day of this pattern.

What does the bullish three line strike pattern indicate is occurring in the markets?
There may be a re-evaluation of the market on the fourth day since it opened in the direction of the trend however it moves in the opposite direction due to profit taking and/or shorting. This should be looked at as just a setback as long as the previous trend was strong. The last day gives the upward trend the strength it needs to continue in its previous direction. Confirmation of this pattern is required on the fifth day and can exist in the form of a white candlestick, a higher close, or a large gap up.

Japanese Candlesticks are the fastest way for new investors to quickly and accurately read stock charts. Once you are comfortable with the major candlestick signals, and you have learned how to read stocks charts continue to expand your expertise by learning the various secondary Candlestick Patterns. Combine these with your favorite technical analysis indicators, such as the moving average , and you have the perfect trading arsenal for evaluating stocks, currencies, commodities, or exchange traded funds .

Continue to learn about continuation patterns and read about the  rising three method candlestick pattern