Three-candle patterns

A story in three parts

Three-candle patterns are like a story with a beginning, a middle and an end. Because they take three candles to form, they show a bit more of the fight than one or two candles can.

The morning star

The morning star shows up after price has been falling. Like the morning star in the sky, it's a hint that a new day may be starting.

1. A big red candle. Sellers are still in charge.
2. A small candle (any color, sometimes a doji). Sellers push a little lower, but the big push is gone. It's a pause.
3. A big green candle that closes at least about halfway up the first red candle's body. Buyers have taken over.

The story: sellers, then a tie, then buyers. Fall, pause, rise.

The evening star

The evening star is the opposite. It shows up after price has been rising, a hint that the day may be ending.

1. A big green candle. Buyers in charge.
2. A small candle. The climb stalls.
3. A big red candle that closes at least about halfway down the first green candle's body. Sellers have taken over.

Rise, pause, fall.

Three white soldiers

Three white soldiers are three strong green candles in a row. Each one opens inside the body of the one before and closes higher, near its high. It looks like soldiers marching up a hill.

When this shows up after a fall or a long sideways range, it says buyers have taken charge for several periods in a row, not just one.

Three black crows

Three black crows are the opposite: three strong red candles in a row, each closing lower, near its low. Sellers are marching down.

When this shows up after a rise, it says sellers have taken charge.

Old names, old colors

The "white" and "black" in these names come from old charts, where up candles were white and down candles were black. On a green and red chart, white soldiers are green and black crows are red.

What goes wrong

• Too late. By the time three big candles finish, price has already moved a lot. Some of the move is over.
• Too tired. Three huge soldiers after a long climb can mean buyers are running out of steam, not starting fresh. Place matters again.
• Not perfect. Real charts are messy. The middle candle of a star might be a little bigger than in the textbook. If you have to squint really hard to see the pattern, it probably isn't one.

Remember

• Morning star: big red, small pause, big green. Can mark a turn up after a fall.
• Evening star: big green, small pause, big red. Can mark a turn down after a rise.
• Three soldiers and three crows show one side in charge for three periods in a row.
• By the time a three-candle pattern finishes, part of the move has already happened.