Three Black Crows & Three White Soldiers
The Logic of Trend Overturning: What are the Crows and Soldiers?
The Three Black Crows and Three White Soldiers are classic 3-candle reversal patterns that signal a definitive shift in market sentiment. They represent the moment where the old trend is not just 'Pausing', but is being aggressively overturned by the opposite side of the market.
Three Black Crows is a bearish reversal pattern that consists of three long, red (bearish) candles that each open inside the previous candle's body and close lower. It shows that sellers have taken structural control and are driving price lower with increasing momentum.
Strict Criteria: Avoid the 'Short' Shadows
Not all three-candle sequences are valid. To be a high-probability pattern, you must follow strict criteria: 1) Long Bodies: Each candle must have a significant vertical range. 2) Open Inside: Each candle must open within the body of the previous candle. 3) Close near Lows: The candles must have very short lower shadows (wicks), indicating that the Bears didn't let the price bounce before the close.
Three-Crows Execution Checklist
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Sequence: Three consecutive long-bodied candles
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Constraint: Each MUST open inside the prior body
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Constraint: Closes must be near the extreme (No long wicks)
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Verified: Volume must increase on each of the three bars
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Entry: Sell/Buy on 50% retracement of the second bar
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Stop-Loss: Place 10 pips beyond the first candle's origin
The Three White Soldiers: Building a Structural Floor
The Three White Soldiers is the bullish counterpart. It appears at the end of a downtrend and consists of three long, green (bullish) candles. Like the crows, each soldier must have a strong body and very small upper shadows. This confirms that the buyers are absorbing every bit of supply and are confident enough to hold their positions through the close of the period.
Strategy: Trading the Retest of the Middle Candle
The Breakout Signal: The second and third candles are the highest-momentum parts of the move. Entering on the close of the third candle is the standard approach, but the risk-to-reward ratio is often poor because the move is already extended. The Mean Reversion: A superior strategy is to wait for a 50% pullback of the 'Second' candle's body. Institutions often 'Scale in' to these deep levels after a high-momentum push. If you take an entry here, you can place a much tighter stop-loss beyond the start of the first candle.