Three White Soldiers is a classic technical analysis pattern in stocks, which usually appears after a price decline and signals a potential reversal to an uptrend.
Generally speaking, "Three White Soldiers" is a bullish pattern.
This pattern consists of three consecutive bullish candles, with each candle's opening price within the body of the previous candle and the closing price near the day's high.
This pattern symbolises increasing buying pressure and decreasing selling pressure, indicating a shift from bearish to bullish sentiment.
Three White Soldiers have the following features on the technical chart:
Continuity: Three White Soldiers must appear consecutively, with each candle's opening price within the body of the previous candle and each candle's closing price higher than the previous one.
Volume: The volume of the three candles should gradually increase (or show an increasing trend), indicating growing market confidence in the uptrend.
No or minimal upper shadows: Each candle of the three should have no or minimal upper shadow, indicating lower selling pressure and a dominant buying trend.
Let me give you an example to better understand Three White Soldiers:
Amazon (AMZN):
On March 16, 2022, after a period of decline, Amazon formed a Three White Soldiers pattern with an overall increase in trading volume, indicating increased bullish strength and a potential future upward trend. Subsequently, Amazon's stock price experienced a certain degree of uptrend.
Regarding the Three White Soldiers pattern, you should pay attention to the following:
Confirmation signal: Three White Soldiers pattern requires three consecutive bullish candles to confirm the formation. You should consider entering the market after confirming the pattern.
Confirmation of volume: When the Three White Soldiers pattern appears, the trading volume should show an overall increasing trend. If the volume does not increase, the reliability of the pattern will decrease.
Stop loss: After entering the market, you should set a stop-loss point to reduce losses in case of market reversal or misjudgment.
When judging the Three White Soldiers pattern, you should combine other technical indicators and fundamental analysis of stocks to make comprehensive judgments to better grasp the market trend.
That's all about the knowledge of the Three White Soldiers technical pattern!