Three White Soldiers Candlestick Pattern

The three white soldiers, also known as the three advancing white soldiers, is a Japanese candlestick pattern that makes $31.50, $60.60, and $19.60 in the crypto, forex, and stock markets, respectively, on average per $100 risked.

This is one of the few patterns that traditional trading and investment advice hold.

What Is a Three White Soldiers Candlestick Pattern?

Three White Soldiers Candlestick Pattern Illustration

The three white soldiers pattern is a bullish reversal pattern that lets you know the existing downtrend may be about to reverse.

The data indicates that this is true, so let’s learn how to identify this pattern so you can profit from its reversal tendencies.

How to Identify Three White Soldiers Candlestick Patterns

The following are the requirements for a valid three white soldiers pattern:

  • Three bullish medium to large candlesticks with consecutively higher closes.
  • Each candle must open within or near the previous candle’s real body.
  • Each candle must have a very short or no upper shadow.
  • The pattern must occur during a downtrend.

We can see the three white soldiers pattern on the Agilysis (AGYS) daily price chart on July 8th, 2013. 

The price is in a downtrend with multiple consecutive bearish candlesticks after an earnings announcement and is below the fifty-day moving average. 

We then see three consecutive bullish candlesticks showing the bulls have shown up. Each candle opens within or near the previous candle’s real body, with the close very close to the high of the day, giving us small or no wicks. This fulfills the candlestick formation requirements. 

With an understanding of how this pattern forms, let’s dig into the best trading strategy for these advancing soldiers.

How to Trade the Three White Soldiers Candlestick Pattern

The three white soldiers candlestick pattern should be traded as a bullish reversal. Traders should go long at a break of the third candlestick’s high with a stop loss set below the third candle’s low. The optimal risk-reward ratio for this pattern is 5, 3, and 1 in the crypto, forex, and stock markets, respectively.

Let’s look at an example to make this lucid.

Three White Soldiers Bullish Reversal Trade Setup

We can see the three white soldiers candlestick pattern on the Kornit Digital (KRNT) daily chart on December 28th, 2018.

Price is in a downtrend and is below the fifty-day moving average. We then see the prevailing downtrend weaken with the three consecutive bullish candlesticks. 

With the pattern identified, how do we trade these three candlesticks?

Traders go long on a break of the high of the third candlestick with a stop loss set below the third candlestick.

In our Kornit example above, the high of the third day is $18.85. We break above that price, causing a long entry the next day. Price does retrace but doesn’t go below the third candle’s low and see price trends upward for a profitable trade.

So what does the past performance of this candlestick formation look like? Let’s take a look!

Does the Three White Soldiers Candlestick Pattern Work? (Backtest Results)

Using the following rules, I backtested three white soldiers candlestick patterns on the daily timeframe in the crypto, forex, and stock markets.

  • A close above the 50-day SMA constitutes an uptrend.
  • I tested risk-reward ranges from 1 to 5. 
  • The optimal risk-reward ratio is selected using profit per bar.
  • Entry and exits are discussed in the trading section above.
  • Confirmation must occur within three days of the pattern signal.

Three White Soldiers Bullish Reversal Backtest Results

cryptoforexstock
pattern_namethree white soldersthree white soldersthree white solders
pattern_categorybullish reversalbullish reversalbullish reversal
pattern_bars333
required_trenddowntrenddowntrenddowntrend
traded_asbullish reversalbullish reversalbullish reversal
stop_bar_typelowlowlow
entry_bar_typehighhighhigh
risk_reward531
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers18292436
patterns381922945
trades32994789
confirm_perc0.840.520.83
wins7400470
losses25594319
win_perc0.2190.4020.596
avg_win_bars11.5729.5913.73
avg_loss_bars14.2827.8913.7
cons_wins255
cons_losses493
edge0.3150.6060.196
cryptoforexstock
pattern_namethree white soldersthree white soldersthree white solders
pattern_categorybullish reversalbullish reversalbullish reversal
pattern_bars333
required_trenddowntrenddowntrenddowntrend
traded_asbullish reversalbullish reversalbullish reversal
stop_bar_typelowlowlow
entry_bar_typeclosecloseclose
risk_reward531
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers18292436
patterns381920946
trades321003806
confirm_perc0.840.520.85
wins7403481
losses25600325
win_perc0.2190.4020.597
avg_win_bars11.2929.9413.31
avg_loss_bars14.3228.4813.43
cons_wins255
cons_losses493
edge0.3150.6060.197

Three White Soldiers Bearish Continuation Backtest Results

cryptoforexstock
pattern_namethree white soldersthree white soldersthree white solders
pattern_categorybullish reversalbullish reversalbullish reversal
pattern_bars333
required_trenddowntrenddowntrenddowntrend
traded_asbearish continuationbearish continuationbearish continuation
stop_bar_typehighhighhigh
entry_bar_typelowlowlow
risk_reward131
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers18292436
patterns4121841047
trades10482350
confirm_perc0.240.220.33
wins0119
losses10481331
win_perc0.00.0020.054
avg_win_bars0.03.01.95
avg_loss_bars0.00.090.0
cons_wins011
cons_losses273
edge-1.0-0.994-0.896
cryptoforexstock
pattern_namethree white soldersthree white soldersthree white solders
pattern_categorybullish reversalbullish reversalbullish reversal
pattern_bars333
required_trenddowntrenddowntrenddowntrend
traded_asbearish continuationbearish continuationbearish continuation
stop_bar_typehighhighhigh
entry_bar_typeclosecloseclose
risk_reward115
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers18292436
patterns4121841047
trades361408942
confirm_perc0.880.640.9
wins014
losses361407938
win_perc0.00.0010.004
avg_win_bars0.00.02.25
avg_loss_bars0.00.00.02
cons_wins011
cons_losses4177
edge-1.0-0.999-0.98

Three White Soldiers Mean Reversion Backtest Results

cryptoforexstock
pattern_namethree white soldersthree white soldersthree white solders
pattern_categorybullish reversalbullish reversalbullish reversal
pattern_bars333
required_trenddowntrenddowntrenddowntrend
traded_asbullish mean reversionbullish mean reversionbullish mean reversion
stop_bar_typeatratratr
entry_bar_typepattern_lowpattern_lowpattern_low
risk_reward111
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers18292436
patterns4121841047
trades19082
confirm_perc0.020.040.08
wins17149
losses01933
win_perc1.00.7890.598
avg_win_bars0.01.850.96
avg_loss_bars0.01.02.27
cons_wins132
cons_losses021
edge1.00.5790.198
cryptoforexstock
pattern_namethree white soldersthree white soldersthree white solders
pattern_categorybullish reversalbullish reversalbullish reversal
pattern_bars333
required_trenddowntrenddowntrenddowntrend
traded_asbearish mean reversionbearish mean reversionbearish mean reversion
stop_bar_typeatratratr
entry_bar_typepattern_highpattern_highpattern_high
risk_reward111
timeframe2015-20212010-20212000-2021
bar_perioddailydailydaily
total_tickers39513516951
pattern_tickers18292436
patterns4121811041
trades27539616
confirm_perc0.660.250.59
wins16356357
losses11183259
win_perc0.5930.660.58
avg_win_bars1.381.982.27
avg_loss_bars3.272.662.86
cons_wins274
cons_losses132
edge0.1830.320.16

Similar Candlestick Patterns

Three White Soldiers vs. Three Black Crows Candlestick Pattern

The three black crows and the three advancing white soldiers are opposites. The three white soldiers candlestick pattern consists of three consecutive bullish candles in a downtrend. In contrast, the three black crows have three successive bearish candlesticks in an uptrend. They are both reversal patterns, but they deliver different results.

The Bottom Line

The three advancing white soldiers pattern works as intended. It is a bullish candlestick pattern that alerts traders to manage their existing short positions and prepare for bullish price reversal trading strategies.

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