Three Line Strike |
Characteristic of Candlesticks: Reversal
Relevance of Candlesticks: Bullish
Prior Trend of Candlesticks: Bullish
Reliability of Candlesticks : Low
Confirmation of Candlesticks: Required
Candlestick Patterns Key Reference |
DESCRIPTION
Three Line Strike pattern is a three adjacent bullish candlesticks followed by a long bearish candlestick which engulf all preceding three bullish candlesticks.
If there is a strong bullish uptrend before this pattern, then it should continue.
PATTERN RECOGNITION
1. Three Line Strike pattern can be identified by an uptrend.
2. Refering to above diagram, we will see three adjacent bullish candlesticks each with with higher close.
3. Then we will see the next following bearish candlestick open at the higher level but closes below the opening price of the first candlestick.
EXPLAINATION
The first three bullish candlesticks indicate an uptrend market.
The fourth candlestick opens in the direction of the trend, however the market then reverse to the opposite direction due to closing position by the buyers.
There may be a reconsideration of the market direction, however we know the gain is wiped out of the previous three bullish days.
Since the previous three days uptrend are very strong, this may only be a temporary pull back due to profit taking by the buyers. The last bearish candlestick indicated buyers who have liquidated their buy position which may now give the market the new strength to continue an uptrend direction.
The Continuation Patterns imply that a trend has temporary paused and will continue its original trend rather than reversal.
POINT TO NOTE
A confirmation on the fifth bullish candlestick is definitely required with a larger gap upward or a higher close.
CANDLESTICK PATTERNS KEY REFERENCE
Irrespective of Color (Can be bullish or bearish) |
Uptrend |
Consolidation |
Downtrend |
ANTICIPATED DIRECTION OF TREND
Lighter Arrow = Lower Probability
Solid Arrow = Higher Probability
More Likely to go sideway, Less likely to rally
|
More likely to rally, Less likely to go sideways
|
More likely to go sideway, Less likely to fall
|
More likely to fall, Less likely to go sideways |
