Lesson 11: Triple Candlestick Patterns

To identify triple Japanese candlestick patterns, you need to look for specific formations that consist of three candlesticks in total.

These candlestick formations help traders determine how the price is likely to behave next.

Some three candlestick patterns are reversal patterns, which signal the end of the current trend and the start of a new trend in the opposite direction.

And other three candlestick patterns are continuation patterns, which signal a pause and then the continuation of the current trend.

Let’s take a look at the popular triple Japanese candlestick patterns.

Evening and Morning Stars

The Morning Star and the Evening Star are triple candlestick patterns that you can usually find at the end of a trend.

They are reversal patterns that can be recognized through three characteristics.

We’ll use the Evening Star Pattern on the right as an example of what you may see:

1. The first candlestick is a bullish candle, which is part of a recent uptrend.
2. The second candle has a small body, indicating that there could be some indecision in the market. This candle can be either bullish or bearish.
3. The third candlestick acts as a confirmation that a reversal is in place, as the candle closes beyond the midpoint of the first candle.

Three White Soldiers and Black Crows

The Three White Soldiers pattern is formed when three long bullish candles follow a DOWNTREND, signaling a reversal has occurred.

This type of triple candlestick pattern is considered as one of the most potent in-yo-face bullish signals, especially when it occurs after an extended downtrend and a short period of consolidation.

The first of the “three soldiers” is called the reversal candle. It either ends the downtrend or implies that the period of consolidation that followed the downtrend is over.

For the Three White Soldiers pattern to be considered valid, the second candlestick should be bigger than the previous candle’s body.

Also, the second candlestick should close near its high, leaving a small or non-existent upper wick.

For the Three White Soldiers pattern to be completed, the last candlestick should be at least the same size as the second candle and have a small or no shadow.

The Three Black Crows candlestick pattern is just the opposite of the Three White Soldiers.

It is formed when three bearish candles follow a strong UPTREND, indicating that a reversal is in the works.

The second candle’s body should be bigger than the first candle and should close at or very near its low.

Finally, the third candle should be the same size or larger than the second candle’s body with a very short or no lower shadow.

For the Three Black Crows pattern to be completed, the last candlestick should be at least the same size as the second candle and have a small or no shadow.

Three Inside Up and Down

The Three Inside Up candlestick formation is a trend-reversal pattern that is found at the bottom of a DOWNTREND.

This triple candlestick pattern indicates that the downtrend is possibly over and that a new uptrend has started.

For a valid three inside up candlestick formation, look for these properties:

1. The first candle should be found at the bottom of a downtrend and is characterized by a long bearish candlestick.
2. The second candle should at least make it up all the way up to the midpoint of the first candle.
3. The third candlestick needs to close above the first candle’s high to confirm that buyers have overpowered the strength of the downtrend.

Conversely, the Three Inside Down candlestick formation is found at the top of an UPTREND.

It means that the uptrend is possibly over and that a new downtrend has started.

A Three Inside Down candlestick formation needs to have the following characteristics:

1. The first candle should be found at the top of an uptrend and is characterized by a long bullish candlestick.
2. The second candle should make it up all the way down the midpoint of the first candle.
3. The third candlestick needs to close below the first candle’s low to confirm that sellers have overpowered the strength of the uptrend.