Three Line Strike Sample: Definition & Methods

2025.09.29 2025.09.29
What Is a Three Line Strike Candlestick Sample: Full Information

Artem Parshinhttps://www.litefinance.org/weblog/authors/artem-parshin/

Japanese candlesticks characterize some of the broadly used components of technical evaluation. Among the many huge variety of candlestick patterns, mixtures of three or extra candlesticks are thought of probably the most dependable. Nonetheless, their utility does require a sure diploma of information.

These dependable formations embrace chart patterns such because the Bullish Three Line Strike and Bearish Three Line Strike. They’ve been proven to generate substantial income over prolonged intervals, with some merchants attaining returns of as much as 20–25% of their preliminary deposit. Let’s take a better have a look at find out how to successfully use the three Strike sample in Foreign exchange.

Main Takeaways

Understanding the Construction of the Three Line Strike Sample

A Three Line Strike in buying and selling represents a candlestick continuation sample. It’s thought of a reasonably dependable indicator of the continuation of the earlier pattern, highlighting the distinction in buying and selling quantity between trending and correcting markets.

A bullish Three Line Strike sample and a bearish Three Line Strike sample include three consecutive candles of the identical colour and one giant engulfing candle. Novice merchants might confuse them with the Three Falling Strategies or Three Rising Strategies patterns. The primary distinction between these formations is the second they seem on the chart. For instance, the Three Line Strike is a part of an present major pattern, whereas the Three Rising Strategies bullish reversal sample is a particular sample that alerts a possible pattern reversal.

The Three Line Strike can be one of many uncommon candlestick formations utilized by professionals to precisely determine waves when making use of the Elliott Wave Technique. Based mostly on the looks and dimension of the sign candlestick, you possibly can decide the power and momentum of the pattern.

The sample offers the strongest sign of a pattern continuation when the fourth candlestick closes on the opening degree of the primary candlestick. The sign can be weaker if the fourth candlestick considerably exceeds the vary of the earlier three candlesticks, because it implies that the countertrend is gaining traction, which could even reverse the principle pattern. As well as, the sign’s reliability is dependent upon the three consecutive candles within the sample. The Three Line Strike generates probably the most dependable sign when all three Japanese candlesticks have our bodies and wicks of the identical dimension.

Bullish vs. Bearish Three Line Strike Patterns

Like most candlestick patterns, the Three Line Strike sample has two sorts: a Bullish Three Line Strike and a Bearish Three Line Strike. Thus, the sample can mirror a downward or upward pattern. The first distinction between these two patterns lies within the colour of the candlesticks and the prevailing pattern that existed earlier than the sample started to develop. If the sample begins to seem throughout a downtrend, it’s a Bearish Three Line Strike, and whether it is forming throughout an uptrend, it’s a Bullish Three Line Strike.

Bullish Three Line Strike

The Three Strike bullish sample emerges when costs are trending upward. When a bullish Three Line Strike sample seems on the chart, merchants see that bulls proceed to push the value increased, sustaining the bullish quantity. Nonetheless, a short-term pullback happens available in the market, and as soon as it’s over, most quick positions are closed, resulting in a brand new worth enhance.

The primary three bullish Japanese candlesticks mirror the continuation of the present upward pattern. Then, a big bearish candle seems, overlapping the three earlier white candlesticks. This candlestick alerts that, if all situations are met, the gross sales quantity can be step by step absorbed after as soon as it closes.

Realizing that their quantity is inadequate to proceed the value decline, bears exit the market or be a part of the bulls. The results of the formation is the whole absorption of the complete gross sales quantity, accompanied by a continuation of the principle upward pattern and a shift in market sentiment from bearish to bullish.

Bearish Three Line Strike

The Three Line Strike bearish sample happens when the value is shifting in a downtrend. When merchants spot a Bearish Three-Line Strike on the chart, they perceive that bears proceed to place stress on the value, sustaining excessive buying and selling quantity and forming a short-term breakout of the uptrend. Nonetheless, after the breakout, most lengthy positions are closed, resulting in a brand new stoop within the worth.

The primary three candles of the bearish sample function a affirmation of the continued downward pattern. After that, a big white candle seems, masking the three earlier black candles. This massive candle signifies that the shopping for quantity is step by step absorbed after the candle closes. Bulls, realizing that their quantity is inadequate to proceed the value development, shut their positions or be a part of the bear camp. The results of the formation is the absorption of the complete buy quantity and the continuation of the principle downward pattern with a change in sentiment from bullish to bearish.

The Psychology Behind the Three Line Strike Sample

Most candlestick patterns will be categorized into two principal sorts: reversal and continuation patterns. Generally, merchants might misread them, as the vast majority of patterns are sometimes comparable to one another however generate completely different alerts. It’s their similarity that always results in misinterpretation, errors, and monetary losses.

The psychological facet of buying and selling has all the time been paramount, and in an try to reduce these dangers, merchants attempt to automate their methods as a lot as attainable or restrict their methods to strict buying and selling plan tips. Candlestick patterns such because the Three Line Strike, Three White Troopers, or Three Black Crows are chart formations which are ineffective with out a clear buying and selling plan, as their construction options misleading worth actions that always confuse novice merchants.

The Three Line Strike sample consists of three principal elements, every harboring a hazard that may result in missteps.

1. The primary three candles of the bullish continuation sample point out a decline in buying and selling quantity in the principle pattern and resemble a typical waning uptrend after reaching the height.
2. The fourth candle absorbs all the quantity of the earlier three candles, making an attempt to make you consider that the market has reversed to the draw back.
3. The next candle, which ought to proceed the worldwide pattern, is commonly very quick, which can lure inexperienced merchants right into a lure, displaying that bullish momentum has run out of steam.

The truth is, the fourth candle, which frequently misleads merchants, is solely a pullback. All a dealer must do to keep away from falling into the lure is wait till new white candles cowl the corrective candle once more.

The best way to Establish the Three Line Strike Sample on a Chart

The three Strike chart sample not often seems on worth charts. Nonetheless, it’s important to acknowledge it by the next options if you wish to incorporate it into your buying and selling technique.

1. Earlier than the sample begins to kind, a transparent downward or upward pattern needs to be seen on the chart.
2. The primary three candles of the sample nearly all the time kind swing lows or highs.
3. The fourth candle all the time has a unique colour.
4. The closing worth of the fourth candle is commonly increased or decrease than the opening worth of the primary candle.
5. A worth hole might emerge between the third and fourth candles.
6. The physique of the fourth candle ought to all the time be bigger than the physique of any of the primary three candles of the sample, ideally bigger than all three candles.
7. A robust fourth candle typically has an extended shadow.
8. All subsequent candles usually goal to achieve the opening worth of the fourth candle.

If all situations are met, the sample will level to a pattern continuation. Usually, this pattern can persist for an prolonged interval, which, when mixed with trailing cease orders, can yield substantial income for merchants.

Technical Evaluation: When and The place the Sample Works Finest

Nearly any candlestick sample doesn’t carry out properly as a standalone ingredient, and to filter out false alerts, it’s typically used together with technical indicators.

As for the Three Line Strike sample, the most typical methodology of filtering alerts is to make use of the Momentum technical indicator, which measures the velocity and power of worth actions.

Nonetheless, I don’t advocate this mixture to merchants who have no idea find out how to correctly modify technical indicators’ settings. The actual fact is that, for every time interval, it’s essential to precisely choose the interval of the pattern indicator. Concerning the Momentum indicator, it isn’t adequate to pick out the interval for the time-frame; it is usually essential to contemplate the interval throughout which the pattern shaped, as indicated by the sample. 

To keep away from difficulties with configuration, it’s higher to make use of a mix with the MACD oscillator. This can be a extremely versatile oscillator that mechanically adjusts to market situations, highlighting entry and exit factors throughout numerous time frames.

It is advisable to make it possible for the Three Line Strike sample coincides with the pattern reversal level proven by the indicator. In our case, the indicator has pierced the 0 threshold. If the sample and the potential pattern reversal coincide in time, the sample offers a real sign. 

Methods for Buying and selling the Three Line Strike Sample

The truth is, buying and selling utilizing the Three Line Strike sample includes a slender vary of alerts for coming into the market, and most frequently, merchants use the traditional pattern breakout buying and selling technique. The reason being that different methods carry dangers related to very tight stop-loss orders, which will be significantly difficult for novice merchants.

Breakout Technique

The pattern breakout buying and selling technique is a well-established methodology that employs bullish or bearish continuation patterns and has been broadly adopted because of its clear order placement ranges.

Buying and selling utilizing this technique includes opening trades that align with the pattern course after the sample has been recognized. To open a commerce, it’s important to attend till the ultimate fourth candlestick is totally engulfed by the next ones. After that, a pending purchase or promote order is about on the opening degree of the fourth candle, and the commerce is accompanied by a trailing cease. A stop-loss order needs to be set on the closing worth of the fourth candle, and solely after the place has been opened.

Pullback Technique

This buying and selling technique is a substitute for the essential breakout technique. It suggests opening a commerce solely after the value retests the breakout level.

It’s best to wait till the value returns to check the breakout degree of the fourth candle, after which you possibly can open a commerce within the course of the prevailing pattern. This technique is taken into account a safer methodology of coming into the market, as the value typically returns to a breakout degree. If a stop-loss order is about in line with the breakout technique, it may be triggered. The primary downside of this technique is that you could be miss income whereas ready for the value to drag again. For that reason, you need to resolve what’s extra vital to you: maximizing revenue or minimizing danger.

Confluence Technique

This buying and selling technique is described partially above when discussing the affirmation of alerts generated by patterns. When used together with the patterns, technical indicators of divergence and convergence are employed. In our case, these are Transferring Common Convergence/Divergence (MACD) and the Superior Oscillator (AO). The MACD is extra appropriate for H4 and better time frames, whereas the AO is best suited to buying and selling on hourly and decrease time frames.

The technique includes evaluating charts. If the indicator crosses the zero line or alerts a pattern reversal in the meanwhile of sample formation, it supplies a sign to enter the market. The indicator values are then used to observe the commerce. If the pattern is sustainable, the indicator will present convergence. Conversely, when convergence modifications to divergence, it’s advisable to shut the commerce, as a pattern reversal is more likely to happen.

Managing Danger When Buying and selling the Three Line Strike Sample

As with all different technical evaluation sample, the Three Line Strike sample works successfully solely when the principles of danger administration are adopted:

1. Calculate your margin based mostly in your danger tolerance, as trades opened with the sample can take a substantial period of time to shut. You also needs to perceive how lengthy you possibly can safely hold them open.
2. Verify the sample sign with technical indicators such because the MACD or AO.
3. Don’t open trades the place a take-profit distance is lower than the estimated stop-loss distance.
4. Don’t enter the market proper after the sample seems. Wait till the value breaks by the sample’s sign candlestick.
5. It’s best to diversify your trades based mostly on patterns and allocate not more than 20% of your deposit to them.
6. Don’t enter right into a commerce based mostly on a sample when the market is extremely unstable and influenced by basic components or market information which will have an effect on market situations.
7. Create a plan for buying and selling the sample, encompassing each step ranging from receiving the sign to figuring out exit factors, and comply with it strictly.
8. If the commerce is more likely to drag on, lock in your loss as quickly as attainable. Keep in mind that solely those that lock of their losses instantly endure minimal losses.
9. Use a trailing cease to safeguard your income.

Frequent Errors to Keep away from When Buying and selling the Three Line Strike Sample

Even you probably have studied the sample totally, you can’t be fully positive that the pattern will reverse as deliberate. Comply with the rules under to keep away from widespread buying and selling errors.

Misinterpreting the Sample

As talked about above, the Three Line Strike formation is much like different candlestick patterns, and it’s typically confused by inexperienced merchants with the Three Black Crows or Three White Troopers patterns.

Nonetheless, regardless of the similarities between these patterns, errors will be prevented by monitoring the sequence of alerts. Within the Three Falling Strategies sample, the final black candlestick shouldn’t be a component of the sample, however its execution. An uninformed dealer, seeing three white candlesticks and one giant black candlestick, might imagine that this can be a Three Line Strike. Nonetheless, this isn’t true. It’s sufficient to take a look at how the sample emerged. The three Line Strike happens inside a pattern, and its three white candles are preceded by a number of extra bullish ones. The Three White Troopers sample begins with a big black or white candle. In different phrases, the widespread mistake lies in a plain lack of consideration to element.

Ignoring Market Developments and Volatility

The second widespread mistake is misunderstanding the buying and selling instrument that the dealer chooses to work with. Most candlestick patterns seem because of excessive market volatility. They carry out properly in markets with sturdy volatility, the place there are numerous sellers and patrons.

The alternative is true when a dealer spots a sample on a low-liquidity instrument characterised by erratic worth actions. Attributable to low liquidity, numerous candlestick patterns typically seem on such charts, however they aren’t real, as they come up from an inadequate variety of trades within the asset and a scarcity of market members. Buying and selling such devices typically results in losses.

Backtesting the Three Line Strike Sample

Probably the most efficient strategies of study is to look at the statistics of sample execution on historic charts. Whereas this method is time-consuming, it might probably considerably improve your buying and selling efficiency you probably have complete statistics for a minimum of one buying and selling instrument.

1. The essence of backtesting boils down to picking a timeframe, going way back to attainable within the chart historical past, and in search of this sample as much as the present second.
2. After reviewing the complete chart, you will discover a number of such patterns and perceive how they work on this instrument inside this timeframe.
3. When the sample seems on a dwell chart, you’ll have already got a transparent image of the way it can unfold.
4. For those who discover a sure consistency in its implementation, you possibly can take a look at it on a demo account.
5. Check the sample on one buying and selling instrument utilizing a number of time frames. This may allow you to decide the place it really works greatest.
6. Don’t concentrate on a number of buying and selling devices without delay. It’s higher to stay to 1 or two and apply utilizing them to complement your principal buying and selling technique.

Utilizing the Three Line Strike Sample in Algorithmic and Automated Buying and selling

You probably have expertise working with automated buying and selling methods, you possibly can simply combine the sample into an algorithmic technique. The Three Line Strike sample is pretty easy to create a template for an automatic buying and selling system. It consists of solely 4 candles, which differ in colour.

The best technique to create a pattern-based technique is to develop an algorithm that finds patterns based mostly on the variety of candlesticks, their form, and colour. As soon as the template is created, run a take a look at search on a historic chart and make any essential changes to the parameters. As soon as all preparations are finalized and the outcomes meet your expectations, you possibly can develop a buying and selling technique based mostly on the sample.

At present, the world of algorithmic buying and selling has gone even additional, with the arrival of AI-based algorithms that may acknowledge patterns by their look. You don’t even have to set any parameters. Simply present the AI with just a few photos of the sample, and it’ll scan the charts and discover comparable formations for you.

Conclusion

The Three Line Strike sample is a robust technical evaluation device that may assist merchants resolve when to take care of an open place and when to shut it. In some instances, the three Line Strike can function the idea for an impartial buying and selling technique that can generate further revenue.

Nonetheless, do not forget that no candlestick sample supplies completely dependable alerts, and their effectiveness is dependent upon strict adherence to the principles, which merchants ought to tailor to their buying and selling fashion. The effectiveness of a buying and selling technique finally is dependent upon the right mix of all components, in addition to the chance administration methods.