In this video I want to take a look at three white soldiers and three Black Crowes.
Now as I'm sure you can imagine.
Here's three candlesticks in this patter.
I would also point out that the white soldiers are really green soldiers these days.
This harkens back to the black and white candlesticks.
So think green soldiers.
Red crows.
But you get the idea it's all the same thing really.
So at this point I'm drawing these patterns out and something that I would bring to your attention is
the psychology these patterns because it takes so much to make them occur.
This is typically found on the daily chart.
That's pretty much where people used to refer to these patterns and what happens is you get a bullish
day and then the second day gap lower but the buyers come in and overwhelm the sellers.
And then on the third day we get another gap lower and the buyers come in and overwhelm the sellers
we'll think about how much momentum building and how much wherewithal that takes by the buying public
to push the market higher.
Three black crowes same exact thing.
We break down.
We get a gap higher but the sellers come in and overwhelm.
And then on the third day we go up higher.
But the sellers come in and take over again.
Trading These are simple you put your stop loss on the other side of the three candlesticks or if you're
a little bit more conservative you can make it the second candlestick comes down to you really know
what your risk profile is and you're aiming to follow the trend you're aiming to find in this case resistance
or if you're three black crows you're looking for support.
If you don't have that you know the reason I don't say 1 to 1 or 2 to 1 is that you're looking for a
bigger move at this point with a little bit of luck so if you don't have supporter or resistance then
you start looking for candlestick patterns that suggests a reversal like a shooting star or something
like that down the road.
So as always let's take a look at an example you can see rally gap lower rally gap lower rally again.
So on a break of this candlestick pattern sample ask.
In this case could have gone into either one and you can see clearly that we've rallied Where did we
run into our first bits of trouble here at these shooting stars.
So it does work out.
And that's an example why I say use your candlestick pattern because since there was no real clear defined
level and just above you want to at least give it the chance to take off.
So in this situation on Zillow we have negative candle gap higher break down much lower negative candle
gap higher break down much lower.
So clearly this is a cell signal and with a bigger spread out pattern like this you probably could just
go ahead and put the stop loss somewhere in the second candlestick.
And where do you get your signal to reverse.
Well right here in support you get an inverted hammer the brakes to the upside.
So it did in fact work these candlesticks though sometimes can lead to massive moves lower.
And for that matter as I recorded this it still hasn't hit your stop loss had you decided to write it
out but obviously this is a downtrend.
There was support there so it would make sense to take advantage of this.
These candlestick painters don't happen that often on the daily charts and when they do you really should
pay attention.
And in fact I can see a slight gap here so that technically did work itself out and you can see that
we got a nice run up.
We got a hammer back here when you would have gotten in.
So that offered support and really this shooting star was your first sign of trouble you probably would
have gotten out up here.
So that's an even better example of the three white soldiers very strong painters.
Don't happen all the time.
Show a continuation and a resiliency that you should pay attention to.