Three Line Strike Candlestick Patterns

Three Line Strike Pattern is a candlestick pattern, consists of four candlesticks that typically signals a continuation of an existing trend and a confirmation of previous trend reversal.

Bullish Three-line Strike:

    This pattern is characterized by a series of three bearish candles like Three Black Craw followed by a long bullish candle that engulfs all previous three. It suggests that buyers have overwhelmed sellers that leading to a shift of momentum in sentiment and a possible continuation of upward movement.

Bearish Three-line Strike:

    This pattern involves three consecutive bullish candles like Three White Soldiers followed by a long bearish candle that engulfs all preceding three. It suggests that sellers have gained control over the market, that leading to a shift of momentum in sentiment and a possible continuation of downward movement.

Trade Setup:

• Entry- Bullish Three-line Strike is for Long Entry, and the high of the large red candle is the entry point. Conversely, a Bearish Three-line Strike is for Short Entry, and the low of the large green candle is the entry point.
• Stop Loss- Incase of Bullish Three-line Strike, the low of the large red candle is the stop loss point. Conversely, in Bearish Three-line Strike, the high of the green candle is the stop loss point.

Success Rate: 

    General sucess rate is 80% if a Bullish Three-line Strike is formed in a downtrend price chart and if a Bearish Three-line Strike formed in a uptrend price chart. But the success rate of the Three Line Strike candlestick pattern can vary significantly by the several factors which can influence the patterns reliability, i.e. Market conditions, Timeframe, Confirmation with other indicators, etc.

While this candlestick pattern is a valuable tool in technical analysis but it's also essential to remember that no pattern is foolproof. So, it's crucial to use in conjunction with other technical analysis tools and to consider the broader market context before making any trading decisions.

Three Outside Candlestick Patterns

The three outside up and three outside down patterns are candlestick formations that indicate a potential trend reversal. These patterns consist of three consecutive candlesticks arranged in a specific order, suggesting a loss of momentum in the current trend.

Three Outside Up

• Price chart is in a downtrend
• The first candle is bearish or red
• The second candle is bullish with a long real body and fully contains the first candle (Bullish Engulfs)
• The third candle is bullish with a higher close than the second candle

Three Outside Down

• Price chart is in an uptrend
• The first candle is bullish or green
• The second candle is bearish with a long real body that fully contains the first candle (Bearish Engulfs)
• The third candle is bearish with a close lower than the second candle

Both three outside up and three outside down patterns are common indicators of potential trend reversals. While they can be effective entry signals, traders should consider confirming these patterns with additional technical analysis before executing trades.

We should be strictly planned for the Entry and Exit as well as STOP LOSS too to miinimize risk.

Abandoned Baby Candlestick Pattern

Abandoned Baby Candlestick Patterns are very rare trend reversal signal which forms by three candlestick, looks similar to the morning and evening star formations but here the real bodies and shadows cann't overlap each other where second candle is looks as Doji Candle. 

Bullish Abandoned Baby:

• The first candle is negative and will be directed to the downtrend.
• The second candle is almost a doji that gaps down from the previous candle.
• The last candle gaps up and ends up that creates a tall positive candle.

Bearish Abandoned Baby:

• The first candle will be directed to the uptrend by positive candle.
• The second candle also will be directed to the primary trend, looks as a doji and not overlapping with the real body or shadow of the previous candle.
• The third candle will be directed to the opposite direction by negative candle.

In case of both bullish and bearish signal, the Entry and Exit points are very importent as well as Stop Loss point. The right location of the stop should be lower than the wick of the second candle of the formation.

Types of Candlestick Pattern with examples

Candlestick patterns are widely used in technical analysis (TA) to identify potential market reversals and trend continuations.

Some commonly used candlestick patterns and their examples are-

1) Doji: A doji has the same opening and closing price, indicating indecision in the market. It suggests a potential reversal or a pause in the trend.

• Long-legged Doji: Open and close prices are near the middle of the trading range.
• Dragonfly Doji: Open and close prices are at the high of the trading range.

• Example: A candlestick with a small body and a long wick on both ends, where the opening and closing prices are very close to each other.

2) Hammer: A hammer has a small body and a long lower wick. It indicates a potential bullish reversal after a downtrend.

• Example: A candlestick with a small body near the top of the candle and a long lower wick.

3) Shooting Star: A shooting star has a small body and a long upper wick. It suggests a potential bearish reversal after an uptrend if happen.

• Example: A candlestick with a small body near the bottom of the candle and a long upper shadows or wick.

4) Engulfing Pattern: An engulfing pattern occurs when a larger present candlestick completely engulfs the previous smaller candlestick whenever its bearish or bullish candle. It signifies a potential trend reversal and the trends are-

• Bullish Engulfing: A small bearish candle is followed by a larger bullish candle.
• Bearish Engulfing: A small bullish candle is followed by a larger bearish candle.

• Example: A bearish engulfing pattern is formed when a large red candlestick completely engulfs the previous smaller green candlestick.

5) Morning Star: A morning star pattern appears during a downtrend and consists of three candlesticks. It indicates a potential bullish reversal.

• Example: The first candle is a large bearish candle, followed by a small bullish or bearish candle, and finally, a large bullish candle that engulfs the first candle.

6) Evening Star: An evening star pattern appears during an uptrend and also consists of three candlesticks. It suggests a potential bearish reversal.

• Example: The first candle is a large bullish candle followed by a small bullish or bearish candle and finally, a large bearish candle that engulfs the first large candle.

7) Hanging Man: A Hanging Man has a small body near the top of the trading range and a long lower wick or shadow. It indicates a potential bearish reversal.

8) Piercing Pattern: A Piercing Pattern occurs when a small bullish candle is followed by a larger bearish candle that opens below the previous day's low but closes above its midpoint. It suggests a potential bullish reversal.

These are major candlestick patterns commonly used by analysts but there are many more patterns that analysts use to analyze price action and make trading decisions. And it is important to combine candlestick patterns with other technical indicators and analysis methods for better accuracy.

Candlestick and types of candlesticks

Candlesticks are a popular tool used in technical analysis to study price movements in financial markets such as stocks, currencies, bonds and commodities. They provide visual representations of price data over a specified time period and can be used to identify trends, patterns and potential market reversals.

A candlestick consists of four main components: i) the open, ii) the close, iii) the high, and iv) the low. Each component represents a specific price level during the given time period. The body of the candlestick is formed by the open and close prices while the high and low prices are represented by thin lines called wicks or shadows.

There are several types of candlestick patterns each with its own characteristics and implications for market behavior. There are some commonly encountered candlestick patterns:-

1. Doji: A doji candlestick has a small body, indicating that the open and close prices are very close or virtually the same. It suggests indecision in the market and potential trend reversals.

2. Hammer: A hammer candlestick has a small body near the top of the trading range and a long lower wick. It typically appears after a downtrend and signifies a potential reversal to an uptrend.

3. Shooting Star: A shooting star candlestick has a small body near the bottom of the trading range and a long upper wick. It often occurs after an uptrend and suggests a possible trend reversal to a downtrend.

4. Engulfing: An engulfing candlestick pattern consists of two candles where the body of the second candle completely engulfs the body of the previous candle. A bullish engulfing pattern occurs at the bottom of a down-trend and implies a potential reversal to an up-trend while a bearish engulfing pattern appears at the top of an uptrend and indicates a possible reversal to a down-trend.

5. Morning Star: The morning star pattern is a three candle pattern that signals a potential reversal from a downtrend to an uptrend. It consists of a long bearish candle followed by a small-bodied candle (could be bullish or bearish) and finally, a long bullish candle that closes above the midpoint of the first candle.

6. Evening Star: The evening star pattern is the opposite of the morning star and suggests a potential reversal from an uptrend to a downtrend. It consists of a long bullish candle, followed by a small-bodied candle and then a long bearish candle that closes below the midpoint of the first candle.

7. Harami: A candlestick with a small body that is completely engulfed by the body of the previous candlestick, which also indicates a potential trend reversal.

8. Marubozu: A long candlestick with no wicks or shadows which indicates a strong trend.

These are just a few examples of candlestick patterns and there are many more variations and combinations that traders analyze to make informed decisions about market trends and potential price movements.

Therefore, Candlesticks are a type of charting technique used in financial analysis to represent price movements of an asset such as stocks, bonds, currencies and commodities. Candlesticks provide a visual representation of the price action over a certain period of time, typically a day, week, month or year.