Understanding Candlesticks_11. 3 White Soldiers 3 Black Crows

Lesson 11: 3 White Soldiers 3 Black Crows

Depicted using three candlesticks, the three white soldiers is a signal for a
bullish reversal. All three candlesticks have large real bodies and have very small or
non-existent shadows.

The first candlestick is usually a bullish piercing or bullish engulfing candle. The
second candle should be bigger than the first - and the third candle should be at
least the same size as the second candle.

Similarly, three black crows are a signal for bearish reversal patterns. The same
as its bullish counterpart, it consists of three long candles with small or no upper
shadows.

The first candlestick has either a dark cloud cover or a bearish engulfing
candlestick. The second candle should be bigger than the first and the third can be
either the same size or larger than the second.

The problem with both of these candlestick signals is that by the time they have
fully materialized, the price may have already made the biggest move, so you can’t
jump in the market straightaway.

One way to use these signals is to determine when to get out of your existing
positions. For example, you have been short here and after seeing three white
soldiers appearing, you close your position to protect your profit.

Another way to use them for trading is to wait for the price to retrace and then
enter the market with smaller risks. An example here; after three black crows have
appeared, you wait for the price to rise again and short the market here. Remember
though - just like all the other candlestick signals, these are only valid when seen in
at the resistance and support levels.