How to Trade With Three Candlestick Pattern Signals

1 candlestick can give you a signal to trade. 2 candlestick patterns can give you accurate signals to trade but three candlesticks? Man!

These are the signals you need if you want to achieve high accuracy when trading Forex or binary options.

And what are three candlestick patterns you ask?

These are candlestick patterns made up of 3 candlesticks and used to identify trend reversals or continuations.

Three candlestick patterns allow traders to analyze the market more effectively than patterns formed from 1 and 2 candlesticks.

That’s however not to say that 3 candlestick patterns are the holy grail of trading. You can still lose money with these patterns but not as much as someone trading on the same market with less regard for the patterns.

Some of the most common 3 candlesticks patterns include: –

1). The Three Stars in The South.

This pattern is made up of 3 candlesticks and it is formed in a downtrend.

Each of the 3 candlesticks on the 3 stars to the south pattern is shorter than the previous candlestick.

Also, the low of each candlestick in this pattern increase from one candle to the other.

Should you come across this candlestick pattern when trading, prepare adequately for a trend reversal.

The Three Stars in the South pattern indicates that the downtrend is getting weaker and a bullish reversal is possible.

2). Bullish Doji Star

This is another candlestick pattern formed by three candlesticks and shows a higher accuracy of a trend reversal.

The Bullish Doji Star pattern begins with a long red candlestick, a small gap, a Doji candle at the bottom, and a small gap to the top, and it is finished with a long green candle that’s longer than the first candle in the pattern.

If this pattern is formed on the chart, the price is likely to rise after the fall.

If you are a price action trader, don’t bother looking for more signal confirmation. Only this pattern is enough to enter a successful UP trade in Forex or binary Options.

3). Bearish Deliberation Pattern.

This pattern is formed in an uptrend and it consists of three Doji candlesticks.

The first and second candlesticks in this pattern are approximately the same size and the third candle is much shorter.

Should you spot this candlestick pattern in the charts, know that the market is likely to reverse and prepare adequately to trade DOWN.

4). Downside Gap Three Method.

This pattern is formed on a downtrend and it shows trend continuation.

It starts with two long red candles with a gap down between them then a green candle pops up covering the gap between them (the first and the second candlestick).

If you see this pattern when the market is on a downtrend, continue trading DOWN.

5). Three Inside UP

 

This pattern is an extension of the Bullish Harami Pattern. In case you missed it, read about it in the previous post.

As shown in the image above the 3 inside UP candlestick pattern is formed by a large red candlestick followed by a small green candle covered in the body of the first candle.

The third candle is also green and it closes above the second candle.

This pattern confirms that the downtrend is over and an Uptrend has just begun.

Trade up to achieve success.

6). The Morning Star

This pattern is formed in a downtrend and it begins with a long red candlestick followed by a small candlestick of either red or green color then it is finished with a green candle that covers most of the body of the first candle.

The morning star indicates a bullish trend reversal and if the third candle is longer then there is a chance that the uptrend will be stronger.

7). Morning Doji Star

This is a strong trend reversal pattern formed when a long red candle at the end of a downtrend is followed by a small-bodied candle with long shadows (Doji/Star) and another large green candle as shown in the image above.

This pattern gives a stronger entry signal for buyers and if you capitalize on it, you will achieve great results in trading.

It helps if it is formed at a support level.

8). Three Outside Up.

If you read my previous post then at a glance you should be able to spot the bullish engulfing candlestick pattern in the three outside up pattern.

It is formed by a red candle whose body and shadows are completely covered by the body of the second candle which is green in color.

The third candle in this pattern is also green and it closes above the second candle.

This pattern is formed at the end of a downtrend and it indicates a trend reversal.

9). Three White Soldiers

The Three White Soldiers pattern consists of three green candles.

The opening price of each subsequent candlestick is within the boundaries of the body of the previous candlestick and the closing price steadily increases from one candlestick to the next.

The Three White Soldiers pattern usually indicates a continuation of the uptrend.