Recognition Criteria:
1. Market is characterized by downtrend.
2. We see three consecutive long white candlesticks.
3. Each candlestick closes at a new high.
4. The opening of each candlestick is within the body
of the previous day.
5. Each consecutive day closes near or at its highs.
Explanation:
The Bullish Three White Soldiers Pattern appears in
a context where the market stayed at a low price for
too long. The market is still falling down and it is
now approaching a bottom or already at bottom. Then
we see a decisive attempt upward shown by the long white
candlestick. Rally continues in the next two days characterized
by higher closes. Bears are now forced to cover short
positions.
Important Factors:
The opening prices of the second and third days can
be anywhere within the previous day's body. However,
it is better to see the opening prices above the middle
of the previous day's body.
If the white candlesticks are very extended,
one should be cautious about an overbought market.
The reliability of this pattern is very high, but still
a confirmation in the form of a white candlestick with
a higher close or a gap-up is suggested.
