Timeframes: 15min and above
Currency Pair: Any
Now before you can trade the three white soldiers three white crows forex trading strategy, you need to know what each of these two patterns look like.
THREE WHITE SOLDIERS CHART PATTERN
The three white soldiers pattern is a bullish reversal chart pattern and it consists of 3 bullish candlesticks and this is how it is formed:
- the market has to be in a downtrend.
- then you have 3 green bullish candlesticks that form consecutively-giving you the three white soldiers chart pattern.
When you see the three white soldiers pattern is formed in a downtrend, you should at least take notice because it is a potential signal that the downtrend may be ending.
THREE BLACK CROWS CHART PATTERN
Now, lets get to the 3 black crows chart pattern. Obviously, it will be exactly opposite to the three white soldiers chart pattern shown on the chart above.
The three black crows pattern is a bearish reversal candlestick chart pattern that consists of 3 bearish candlesticks.
Here is how the three black crows chart pattern forms:
- the market has got to be first in an uptrend.
- then three bearish candlesticks form consecutively-the three black crows chart pattern (refer to chart below).
If you see the three black crows chart pattern form in an uptrend market, you should take notice as this is a potential signal that the uptrend may be ending.
THE TRADING RULES ARE VERY SIMPLE
- if a three white solider is formed, place a buystop order 3-5 pips above the high of the 3rd candlestick or if a three black crows form, place a sell stop order 3-5 pips below the low of the 3rd candlestick.
- Place your stop loss above the 3rd candlestick’s high if you placed a sell stop order or place a stop loss below the 3rd candlestick’s low if you entered a buy stop order.
- Take profits may be placed targeting previous swing highs or lows (peaks or bottoms).
- Move stop loss to breakeven when price moves by the amount risked or move stop loss to break even when price has made a swing high or swing low.
- Learn to take partial profits off the table when price moves at least halfway point to reach your take profit target level.
Not all 3 white soldiers or 3 black crows patterns that you see on forming on your charts are created equal. Some you should taken notice, some you should ignore.
Now, how do you decide which ones to take note off and which ones to ignore?
Here’s your answer:
The location where these chart patterns form is very important. You want to be able to trade these chart patterns in areas of:
- support and resistance levels
- pivot levels.
- Fibonacci levels
These are levels of significance. Any place or level apart from these levels should be trade carefully because you really don’t have a reason to expect price to move up or down.
DISADVANTAGES OF THIS FOREX TRADING STRATEGY
- as usual, every forex strategy has its weakness and one of the weakness of this strategy is the fact that sometimes, the distance moved by these two patterns are so huge already and if you enter a trade, your stop loss needs to be so far away.
- the next thing too is that it may be a termporary reversal only when these patterns form and next thing you know, you will get stopped out.
ADVANTAGES OF THIS FOREX TRADING STRATEGY
- If this forex strategy turns out as planned, and if its in a good trending market after the formation of these patterns and you take a trade, you can make a lot of profitable pips easily, especially if you take trade in the larger time frames like the 1hr and above.
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