How to Trade the 3 Candle Pattern?
Candlestick Patterns are a common tool many traders use to identify Potential Market trends and make informed decisions on when to enter and exit the trade.
One such popular pattern that many traders rely on is the 3 candle pattern. The pattern consists of three consecutive candlesticks providing insights into market sentiments and potential price movements.
By learning how to implement the 3 candlestick pattern, traders can enhance their overall success in the stock market.
In this article, we will explore how traders can effectively utilize this pattern to make Profitable trades
How to Identify 3 Candlestick Patterns?
The Three candlestick pattern is a price chart formation consisting of three candlesticks that will either predict a trend reversal or a trend continuation. These formations are considered to be stronger if the occurrence is after a prolonged trend.
There are two types of triple candlestick patterns
Three inside-up Candlesticks Pattern
Three Inside Down Candlestick Pattern
1.Three inside up Candlestick Pattern
The Three inside up candlestick pattern indicates a potential bullish reversal.
The pattern starts with a long Red candle (bearish), indicating a continued downtrend.
The second candle is a smaller bullish candle that opens and closes within the previous red candle’s body.
This implies a temporary pause or continuation. The Thrird candle is a big green candle that engulfs the previous two candles indicating a bullish reversal
2. Three Inside Down Candlestick Pattern
The three inside down pattern indicates a potential bearish reversal. It starts with a long green Candle (bulliish) representing an uptrend.
The second candle is a smaller bearish candle within the body of the previous candle. Implying a temporary pause.
The Third candle is a strong red candle(bearish) that engulfs the previous two candles indicating a reversal in
the trend.
Please note to effectively use this triple candlestick patterns ,traders should use confirmation signals before taking any trading decision. Confirmation signals can be like is it forming at support and resistance levels, supply and demand levels , trendline breaks .
Its beneficial to consider the overall market and use other technical analysis tools to enhance the accuracy.
How to use the three Inside up / down Candlestick Patterns with Supply and Demand Zones ?
Supply and Demand trading is based on the concept that Prices move because of a imbalance between supply and demand levels in the market . A demand zone is a Price zone where there are more buyers and sellers, causing the Price to bounce upwards
A supply zone is where there are more sellers than buyers , causing the price to drop downwards
Lets understand how we have increase our accuracy of trading this triple candlestick patterns with supply and demand levels as additional confirmation.
Lets start with the Three inside up candlestick pattern with the help of a Supply zone formation.
We know that the three inside up candlestick pattern appears to be in an uptrend so we will be looking for a pattern forming in the Supply Zone
Let take a look at the above example , the There Inside up candlestick pattern is in a supply zone. The Price pattern formed in a Supply Zone , traders can take a short decision based on the pattern
Take a look at this example how , a three Inside up candlestick in a demand zone will give you confirmation of a impending uptrend .
Traders can amplify their success in the stock market with the Help of candlestick and Supply and Demand Zone Levels
Also Read: How to draw supply and Demand Zones
Conclusion
The 3 Candle Pattern is a Powerful setup if combined with Supply and Demand Zones, this will assist traders in identifying high Probabilty trade setups .The triple candlestick pattern Indciates a shifts in market trends with Supply and Demand trading and helps traders making improved decisions.
MAK trading school is a pioneer is teaching and training students in the stock market, call us on 7400088842 for information on Stock market courses. Visit us on www.maktradingschool.com for free resources and information
Mahesh Kaamath
Mahesh Kaamath, a seasoned stock market trader with over 11 years of experience and certified research analyst, founded MAK Trading School. As a mentor, he shares comprehensive trading strategies and market insights. His commitment to empowering students with practical knowledge has made him a respected figure in the trading community. Whether you're a novice or seasoned trader, Mahesh Kaamath and MAK Trading School provide essential resources to help you navigate and succeed in the dynamic world of stock trading.
