Triple candlestick pattern is an array of three successive candles which predicts the future trend in advance.
More often it predicts trend reversal after a long downtrend or uptrend.If triple candlestick pattern is confirmed with overbought or oversold conditions of an indicator (either stochastic or RSI) then the trend reversal may be confirmed & a better opportunity for swing trading may occur.
Triple candlestick patterns are rare phenomenon as compared to double candlestick patterns & unless & until not confirmed with other indicator or parameters may produce whipsaws.
Let's study one by one.
Three inside up triple candlestick pattern -
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| Three inside up pattern |
It comes at the end of downtrend.It shows the following characteristics.
a. The first candlestick is long bearish candle.
b. The second candle is white.It's close price should be approximately at the midpoint of first bearish candle.
c. The third candle should close above the high of first candle.
The downtrend worsens when buyers keep themselves out of trade.At a perticular stock price,buyers become sure & enter into the trade.It makes the candle white.The third candle closing above the high of first candle indicates the influence of seller is now fading.
Three inside down triple candlestick pattern -
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| Three inside down pattern |
It is opposite to the previous pattern.
This candlestick pattern comes at the end of an uptrend.
a. The first candle is long bullish candle.
b.The second candle should be black & should close approximately at the middle of the first bullish candle.
c. The third candle should be black & close below the low of the first bullish candle.
Morning star -
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| Morning star |
It is also trend reversal pattern.It comes at the end of downtrend.
The characteristic of morning star is as below.
a.The first candle is strong bearish candle.
b.The second candle is spinning top.This candle may either be black or white.As we already have seen, spinning top represent the indecision in the minds of buyers or sellers, whether the trend is going to continue or reverse.
c.The third candle should be white & should close ahead of the midpoint of first bearish candle.
It confirms that the buyers are now active & trend reversal is going to occur.
Evening star-
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| Evening star |
It is opposite to morning star.It comes at the end of an uptrend.
a.The first candle is strongly bullish.
b.The second candle is spinning top, either black or white.If this indecision in the minds of traders after an uptrend at overbought level may reverse the trend.
c.The third candle should be prominent black closing below the midpoint of the first bullish candle.
Such a pattern at the overbought level confirms downtrend.
Three white soldiers -
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| Three white soldiers |
It comes at the end of downtrend.
a.The first candle should be small & white.
b.The second candle should be white & larger than the first.This candle should have less or no upper shadow.It do mean that close price & high price should be approximately same.
c.The third candle should be larger of three & have no or less upper shadow.
Less or absence of upper shadow indicates the absence of sellers & a strong uptrend.
Three black crows-
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| Three black crows |
It is just opposite of three white soldiers & comes at the end of an uptrend.
a.The first candle should be small & black.
b.The second candle should be black, more big than the previous.Also this candle should have no or little lower shadow,meaning low price & close price should be approximately equal.
c.The third candle should be largest of all & it's close price & low price should be approximately equal.It do mean sellers are becoming dominant & downtrend started.
As already stated, candlestick patterns alone doesn't predicts the exact future trend.These patterns should be coupled with indicators or other parameters.Easier way is to compare these candlestick patterns with oversold or overbought conditions of stochastic or RSI.
If these patterns are occurring at oversold or overbought level the trend may be confirmed.
