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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's Three White Soldiers

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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 11/21/2014
17,810 91.06 0.5%
9,094 40.49 0.4%
596 2.36 0.4%
4,713 11.10 0.2%
2,064 10.75 0.5%
YTD
7.4%
22.9%
21.5%
12.8%
11.6%
Tom's Targets    Overview: 11/14/2014
18,100 or 17,200 by 12/01/2014
9,300 or 8,700 by 12/01/2014
610 or 570 by 12/01/2014
5,000 or 4,500 by 12/01/2014
2,100 or 1,975 by 12/01/2014

Written and copyright © 2008-2014 by Thomas N. Bulkowski. All rights reserved.

Three White Soldiers Candlestick: Summary

The three white soldiers is one of the few candlestick patterns that I am proud to say I know. Yes, samples of the candle pattern are as rare as finding a $5 bill on the street, but it performs very well. It acts as a bullish reversal 82% of the time, ranking 3 out of 103 candlestick types, where 1 is best. When you consider that the close is awfully close to the top of the last candle in a series of three rising candles, the performance is not so good. For a downward breakout to occur, price would have to make a serious drop and plummet even more to push up the performance score. In fact, the high performance is due to just those factors: few candles with downward breakouts. Those with upward breakouts have lousy performance. So maybe I am less proud to say that I know the three white soldiers.

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My book, Encyclopedia of Candlestick Charts, pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

If you click on this link and then buy the book (or anything) at Amazon.com, the referral will help support this site. Thanks. -- Tom Bulkowski

 

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Three White Soldiers Candlestick: Important Results

Theoretical performance: Bullish reversal
Tested performance: Bullish reversal 82% of the time
Frequency rank: 67
Overall performance rank: 32
Best percentage meeting price target: 34% (bull/bear market, up/down breakout)
Best average move in 10 days: -7.66% (bear market, down breakout)
Best 10-day performance rank: 4 (bull market, down breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal three white soldiers candlestick
Three White Soldiers
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Three White Soldiers Candlestick: Discussion

The three white soldiers candlestick pattern acts as a bullish reversal 82% of the time. What that means is it is more likely to breakout upward (a close above the top of the highest candle) than it is to breakout downward (a close below the lowest of the three candles). Duh. Just 593 out of 3,333 samples showed downward breakouts.

The candle ranks 67 for rarity, where a rank of 103 is unknown and 1 is a rock star. The overall performance is 32 and that means price does not trend all that well after the breakout. Nevertheless, after a downward breakout in a bear market, price can drop 7.66% on average, over 10 days, but that uses just 56 samples. I consider a move of 6% to be a gift. The best 10-day performance rank for the three white soldiers candle belongs to downward breakouts in a bull market. I found 537 examples of those, so the sample count is a bit thin.

Three White Soldiers Candlestick: Identification Guidelines

CharacteristicDiscussion
Number of candle linesThree.
Price trend leading to the patternDownward.
ConfigurationLook for three tall white candles, each with a close near the high, higher closes, and bodies that overlap (an opening price within the prior candle's body.
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Three White Soldiers Candlestick: Three Trading Tidbits

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. Look for three white soldiers that appear as an upward retrace in a downward price trend. Expect the downtrend to continue -- page 799.
  2. Three white soldiers within a third of the yearly high frequently act as reversals -- page 800.
  3. Volume gives performance clues -- page 798-799.

Three White Soldiers Candlestick: Example

The three white soldiers candlestick on the daily scale

Circled in red is the three white soldiers candlestick pattern. Each of the three candles is white, tall, opens within the body of the prior candle and closes higher, with a short upper shadow (meaning each white candle closes near the high).

Price continues rising for a fourth day before tumbling. Although the breakout from this three white soldiers is upward, you can see how the trend quickly reverses. A short move after an upward breakout is typical for this pattern. And the breakout is a close either above the high or below the low of the three line pattern.

This is an example of the three white soldiers appearing as a retrace in a primary down trend (see Three Trading Tidbits, above). After the retrace completes, the downward price trend resumes.

-- Thomas Bulkowski

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Copyright © 2008-2014 by Thomas N. Bulkowski. All rights reserved. Consciousness: that annoying time between naps.