Master the Three White Soldiers Candlestick Pattern

Imagine you’re watching a downtrend on the GBP/USD. For days, the bears have been in total control, pushing prices lower and lower. Then, suddenly, three tall, confident green candles appear in a row. They look like a disciplined squad of infantry marching uphill, reclaiming lost ground with every step.

This isn't just a random price move; it’s the Three White Soldiers pattern, and it’s one of the most potent bullish reversal signals in a price action trader's arsenal. But here’s the kicker: if you trade it blindly every time you see three green candles, you’re going to get burned. Context is everything.

In this guide, we’re going to move beyond the textbook definitions. I’ll show you how to spot the 'real' soldiers, how to filter out the fakes, and exactly where to place your stops and targets using real-world numbers.

The Anatomy of the Three White Soldiers

Before we put money on the line, we need to know exactly what we’re looking for. A valid Three White Soldiers pattern consists of three consecutive bullish (green/white) candles that meet these specific criteria:

1. Consecutive Gains: Each candle must close higher than the previous one.
2. The Open: Each candle should ideally open within the body of the previous candle (though in the 24/5 forex market, they often open right at the previous close).
3. The Close: Each candle should close near its high, leaving very small or non-existent upper wicks. This shows that the bulls maintained control right until the end of the session.
4. Size Matters: The candles should be relatively large and of similar size. If the third candle is significantly smaller than the first two, the momentum might be fading.

Pro Tip: Look for 'shaved heads' (Marubozu candles). If the candles have no upper wicks, it indicates that the buying pressure was so intense that there was no retracement before the period ended.

The Market Psychology: Why It Works

Why does this pattern carry so much weight? It represents a massive shift in sentiment.

Think about the players involved. After a long downtrend, the bears are feeling overconfident. They’ve been shorting every bounce. When the first 'soldier' appears, they view it as just another 'dead cat bounce.' But when the second and third candles follow suit, breaking previous resistance levels, panic sets in.

Short-sellers begin to cover their positions (which involves buying), and sidelined bulls, seeing the clear shift in momentum, start jumping in. This 'double whammy' of buying pressure is what creates the sustained reversal. According to Investopedia, this pattern is a visual representation of a complete change in the balance of power from sellers to buyers.

Context is King: When to Trade and When to Fold

If you see Three White Soldiers in the middle of a choppy, sideways range, ignore them. The pattern only gains its 'reversal' status when it appears after a clear, sustained downtrend or at a major historical support level.

The 'Overextended' Trap

One mistake I see intermediate traders make is buying the pattern when the three candles are too large. If the Three White Soldiers move the price by 200 pips in a pair that usually only moves 80 pips a day, the market is likely 'exhausted.' You’re essentially buying at the top of a vertical move.

Instead, look for steady, healthy growth. You want to see the market 'breathing' as it moves up, not gasping for air.

A Step-by-Step Trading Strategy with Real Numbers

Let’s get practical. Imagine we are looking at the AUD/USD on a 4-hour (H4) chart.

1. The Setup

AUD/USD has been sliding from 0.6850 down to 0.6600 over the last two weeks. It hits a major support zone identified on the daily chart.

2. The Pattern Identification

• Candle 1: Opens at 0.6605, closes at 0.6635 (30 pips).
• Candle 2: Opens at 0.6632, closes at 0.6670 (38 pips).
• Candle 3: Opens at 0.6668, closes at 0.6705 (37 pips).

Total move: 100 pips. The candles are healthy, have small wicks, and have broken a minor descending trendline.

3. The Entry

You have two choices here.

• Aggressive: Enter at the close of the third candle (0.6705).
• Conservative: Wait for a small retracement to the high of the second candle (0.6670) or a break of the third candle's high.

Let's say we enter at 0.6710 (5 pips above the pattern high) to ensure momentum is continuing.

4. The Stop Loss

Your stop-loss should go below the low of the first candle in the pattern. In our example, that’s 0.6600.

Risk Calculation:

• Entry: 0.6710
• Stop Loss: 0.6600
• Total Risk: 110 pips.

If you have a $10,000 account and want to risk 1% ($100), you would trade roughly 0.09 lots (9,000 units). Learn more about calculating position sizes to keep your risk under control.

5. The Take Profit

Target the next major resistance level. Looking left on the chart, we see a previous 'swing high' at 0.6880.

Reward Calculation:

• Target: 0.6880
• Entry: 0.6710
• Potential Gain: 170 pips.

This gives us a Risk/Reward ratio of roughly 1:1.5. While not a 'home run,' it's a high-probability setup based on strong momentum.

Common Pitfalls and How to Avoid Them

Pitfall #1: Ignoring Volume

In forex, we don't have centralized volume, but we have 'tick volume.' If the Three White Soldiers are forming on declining volume, be very suspicious. It suggests that the big institutions aren't behind the move. Ideally, volume should increase or remain steady across the three candles.

Pitfall #2: Trading Against the 'Big' Trend

If the Weekly and Monthly charts are screaming 'Bear Market,' a Three White Soldiers pattern on the 15-minute chart is likely just a temporary pullback. Always align your trades with the higher timeframe trend for the best results.

Pitfall #3: The 'Third Soldier' Exhaustion

Sometimes the third candle is massive—twice the size of the first two. This often signals a 'climax' or 'blow-off' top. Professional traders often wait for a 'retest' of the breakout zone before entering in this scenario.

Warning: Never chase a pattern that has already moved significantly past your entry point. If you missed the 'Soldiers,' wait for the next flag or pullback. The market will always be there tomorrow.

Conclusion

The Three White Soldiers pattern is a powerful visual cue that the tide has turned. By looking for healthy candle bodies, small wicks, and—most importantly—proper market context, you can turn this simple pattern into a cornerstone of your trading strategy.

Remember, the goal isn't to catch every move; it's to catch the right moves. Next time you see those three green candles marching up from a support zone, don't just stare at them. Check your levels, calculate your risk, and decide if you're ready to march alongside them.

Your Next Step: Open your demo account and look back through the last month of data on EUR/USD. How many times did the Three White Soldiers appear at a support level? How many of those resulted in a 100-pip move? Data breeds confidence.

Frequently Asked Questions

Is the Three White Soldiers pattern reliable?

Yes, but only when it occurs after a prolonged downtrend or at a significant support level. In a sideways or ranging market, it often produces false signals. Always combine it with other indicators like RSI or Volume for confirmation.

What timeframe works best for Three White Soldiers?

While the pattern appears on all timeframes, it is most reliable on the H4 (4-hour) and Daily charts. Lower timeframes like the 1-minute or 5-minute are prone to 'market noise,' which can make the pattern less effective.

How do I distinguish Three White Soldiers from a fakeout?

Check the wicks. A true Three White Soldiers pattern has very small upper wicks, showing that buyers are holding their ground. If you see long upper wicks, it means sellers are pushing back, and the reversal might fail.

What is the opposite of Three White Soldiers?

The bearish equivalent is the Three Black Crows. It consists of three consecutive long bearish candles appearing at the top of an uptrend, signaling a potential move to the downside.