How to Make Money Trading the Three Line Strike Pattern in Olymp Trade

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What are the Three Line Strike Patterns?

The Three Line Strike Patterns are continuation patterns that occur on both uptrends and downtrends to signify the continuation of such trends.

The pattern comprises four candlesticks beginning with three consecutive candlesticks in the direction of the trend then a fourth candlestick which goes totally against the trend direction.

What is a Bullish Three Line Strike Pattern?

A bullish Three Line Strike is made up of four candlesticks. The first three are consecutive bullish candlesticks which progressively close higher than the previous one in the pattern, posting both higher highs and lows.

Bullish Three Line Strike Patterns

The fourth candlestick is bearish and opens higher than the third candlestick’s close price, even posting a higher high than that third candlestick, then closes at a lower level than the first candlestick of the pattern, posting a lower low than that first candlestick of the pattern.

That means that the fourth candlestick closes and posts a low lower than all the previous three candlesticks in the pattern.

What is a Bearish Three Line Strike Pattern?

A bearish Three Line Strike is made up of four candlesticks.

The first three are consecutive bearish candlesticks which progressively close lower than the previous one in the pattern, posting both lower highs and lows.

The fourth candlestick is bullish and opens lower than the third candlestick’s close price, even posting a lower low than that third candlestick, then closes at a higher level than the first candlestick of the pattern, posting a higher high than that first candlestick of the pattern.

That means that the fourth candlestick closes and posts a higher high than all the previous three candlesticks in the pattern.

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Bearish Three Line Strike Patterns

 

Candlestick patterns alone may not be enough in making trading decisions. It is therefore recommended that the Three Line Strike be used in conjunction with other technical tools like Moving Averages.

Fixed Time Traders need to adjust the trade duration to about 3 to 5 times the candlestick time frame for better results on this pattern. This gives the price enough time to move freely and eventually go as predicted.

Trading Using the Three Line Strike Pattern.

Now that we know how to identify the pattern, we need to transform that knowledge into profits. That is what we shall handle in this section. Let us see how you can trade this pattern profitably to make a fortune out of the markets.

Trade using the Three Line Strike Pattern using the following simple and quick steps;

  1. Establish Trend Direction.
  2. Identify the Three Line Strike Pattern.
  3. Confirm the Trend Continuation.
  4. Enter Buy or Sell Position.
  5. Adjust your Stop Loss.
  6. Adjust your Take Profit.

Let us now get into the details of each step and see what we are really supposed to do at each.

1. Establishing the Trend Direction.

We said that the Three Line Strike is a continuation pattern. It therefore will signify the continuation of an already established trend, whether uptrend or downtrend. That then justifies our first point establishing which trend the price is in.

Establish trend direction

Observe the price action and know the trend.

Note that an uptrend is where the price keeps moving up, posting both higher highs and lows. A downtrend is where the price keeps moving down, posting both lower highs and lows.

After identifying the trend direction, you then know the kind of Three Line Strike Pattern to expect. Let’s move on.

2. Identifying the Three Line Strike Pattern.

If dealing with an Uptrend, you expect a bullish Three Line Strike Pattern.

A bullish Three line Strike is made up of four candlesticks.

The first three are bullish and close higher than the previous one in the pattern, posting both higher highs and lows.

The fourth candlestick is bearish and opens higher than the third candlestick’s close price, posting a higher high than that third candlestick, and closes and posts a low lower than all the previous three candlesticks in the pattern.

If dealing with a Downtrend, you expect a bearish Three Line Strike Pattern.

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Bullish Three Line Strike Patterns

A bearish Three line Strike is made up of four candlesticks.

The first three are bearish and close lower than the previous one in the pattern, posting both lower highs and lows.

The fourth candlestick is bullish and opens lower than the third candlestick’s close price, posting a lower low than that third candlestick, and closes and posts a higher high than all the previous three candlesticks in the pattern.

Once you have identified your Three Line Strike Pattern, then you are ready to proceed.

3. Confirming Trend Continuation.

After identifying the Three Line Strike Pattern, you then need to make sure that it will drive the anticipated trend continuation or not. That is where the use of Moving Averages comes in.

You can utilize moving average crossovers for this case.

Trend Continuation

A bullish Three Line Strike Pattern will be confirmed by a shorter period moving average crossing the longer period moving average from below upwards. A bearish Three Line Strike Pattern will be confirmed by a shorter period moving average crossing the longer period moving average from above downwards.

If the confirmation is done, then you are ready to begin placing the trades appropriately.

4. Entering Buy or Sell Position.

Once the downtrend or uptrend has been confirmed to continue, you then proceed to enter your positions. A bullish Three Line Strike occurring on an Uptrend calls for a Buy Position while a bearish one occurring on a Downtrend calls for a Sell Position.

5. Adjusting your Stop Loss.

If you are trading this pattern on Olymp Trade Forex,

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Place your Stop Loss just below the fourth candlestick of the pattern in a Buy position and just above the same candlestick in a Sell position. You should never ignore your Stop Loss because bad days really do come.

6. Adjusting your Take Profit.

There is no measured distance to gauge how long the trend will continue before it reverses. Therefore, the use of trailing stops is advisable as the trend continues upwards or downwards to lock accumulated profits.

Continue to move your Stop Loss Up in a Buy position and Down in a Sell position as you lock profits until the trend is exhausted and reverses.

Conclusion.

That was all about the Three Line Strike Pattern. Back to you now, as you apply the Pattern in your trading to boost your profits make sure you bookmark this post and come back tell us how profitable you found it.

Happy trading.

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*Risk warning:

The information provided does not constitute a recommendation to carry out transactions. When using this information, you are solely responsible for your decisions and assume all risks associated with the financial result of such transactions.
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Kenn Omollo is an investment writer and a business management consultant at Joon Online Limited. Reach him at - kenn@joon.co.ke

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