Triple Candlestick Patterns 

In our educational and analytical blog, we have covered several types of Japanese candlestick patterns, including double and triple candlesticks. But which is the best and most accurate indicator? 

Undoubtedly, the more candles a pattern consists of, the more reliable the pattern and the greater the probability of confirmation. To identify triple candlestick patterns, you need to look for a specific formation on the chart consisting of three candles. This formation helps you predict the next price movement. 

There are reversal triple candlestick patterns that often indicate the end of the current trend and the beginning of a new, opposing trend. 

There are also continuation triple candlestick patterns that indicate a temporary pause or rest period for the market, followed by a continuation of the current trend. 

Some of the most common triple candlestick patterns are: 

Morning and Evening Star Patterns 

These two patterns are among the most popular triple candlestick patterns that appear on the chart at the end of a prevailing trend. 

They are easily recognizable due to the distinctive shape of the three consecutive candles, although their signals differ. 

We will take the Evening Star pattern as an example. We previously discussed the Morning Star pattern in detail, which is the exact opposite of the Evening Star pattern. (You can visit the Naqdi blog to learn more about the Morning Star pattern and other patterns). 

The Evening Star is characterized by three consecutive candles appearing on the chart at the peak of an uptrend, indicating a potential bearish reversal. 

First Candle (The Morning Candle): This is a long, green, bullish candle, representing part of the recent uptrend and reflecting the dominance of the Bulls (buyers). 

Second Candle (The Star): This has a small red or green body, reflecting a state of hesitation and uncertaintyin the market, indicating the beginning of the Bulls losing control. 

Third Candle (The Evening Candle): This confirms that the reversal has begun, as it closes below the midpoint of the long Morning Candle’s body and reflects the dominance of the Bears (sellers). 

Three White Soldiers Pattern 

This pattern is a strong bullish signal, appearing on the chart at the bottom of a downtrend or after a short period of rest (consolidation) in the market following the downtrend. 

How it Forms: 

The pattern begins with a long bullish candle (the reversal candle), which is the first bullish candle in the formation. 

This candle usually precedes the end of the downtrend or the end of the rest period that followed it. 

It is followed by the second candle, whose body must be larger than the body of the first candle. Its upper wick or shadow should be small or almost nonexistent, indicating that it closed near its high (a requirement for the pattern to be valid). 

Then comes the confirmation with the formation of the third candle, which must be at least the same size as the second candle. 

This pattern reflects a strong dominance of the Bulls (buyers), indicating the beginning of a new uptrend. 

Three Black Crows Pattern 

This pattern is the exact opposite of the Three White Soldiers pattern. It is a strong bearish signal that appears on the chart at the peak of a strong uptrend. 

How it Forms: 

It consists of three consecutive, long red candles following a strong uptrend. 

The body of the second candle must be larger than the body of the first candle. Its lower wick or shadow should be small or almost nonexistent, indicating that it closed near its lowest price (a requirement for the pattern to be valid). 

The third candle “confirmation candle” must also be the same size as the second or larger. 

These Crows indicate that the Bears (sellers) have suddenly taken control and that a bearish reversal has begun. 

Three Inside Up Pattern 

This pattern indicates a strong bullish reversal, appearing at the bottom of a downtrend, suggesting the potential end of the downtrend and the beginning of a new uptrend. 

How it Forms: 

It begins with a long red candle appearing at the bottom of the downtrend. 

This is followed by a second candle, which must be bullish and whose body must cover at least half the length of the first candle. 

Then, a third candle forms, the “confirmation candle,” which must also be bullish and close above the high of the first candle, confirming that the Bulls (buyers) have overcome the Bears (sellers). 

Three Inside Down Pattern 

This pattern is the exact opposite of the Three Inside Up pattern. It appears at the peak of an uptrend and suggests the potential end of the uptrend and the beginning of a new downtrend. 

How it Forms: 

It begins with a long green candle appearing at the peak of the uptrend. 

This is followed by a second red candle, whose body must cover at least half the length of the first candle. 

Then, a third red candle forms, the confirmation candle, which must close below the low of the first candle, confirming that the Bears (sellers) have overcome the Bulls (buyers) and reversed the trend from up to down. 

But are there patterns with more than three candles? 

Rising Three Methods Pattern 

The Rising Three Methods is a bullish pattern with five distinct candles that appear on the chart, indicating the continuation of an upward trend after a period of correction or consolidation (a short market rest). 

How it Forms: 

The first candle is a large, green candle, forming within a clear uptrend. 

This is followed by three smaller candles, usually red, representing the consolidation period “rest” in the market. These smaller candles remain within the range of the first candle (i.e., they do not exceed its high or low). 

Then, a fifth large, decisive green candle forms. 

This pattern indicates that the market experienced a short rest period “consolidation” before the Bulls (buyers) returned strongly, causing the price to resume its upward movement. The fifth candle acts as a confirmation candle, confirming that the Bears (sellers) did not have enough strength to reverse the trend during the consolidation period. 

This pattern provides a signal to start new long positions or increase existing long positions, as its signal confirms the continuation of the uptrend. 

Trading the Rising Three Methods Pattern 

Since this pattern is a strong signal for the continuation of an uptrend, there are typically two ways to enter long positions: 

Traders may enter long positions upon the close of the fifth candle of the pattern “the decisive or confirmation candle”. 

More daring traders can enter when the price breaks above the high of the fifth candledirectly. However, they should be prepared to exit the position immediately if the fifth candle fails to complete the pattern. 

In this pattern, avoid key resistance levels or those close to the pattern, as a trend line or moving average near the pattern may limit gains and hinder the continuation of the uptrend. 

It is preferable to look for the pattern above or near whole numbers (e.g., 50 or 100), as these are attractive levels for traders. 

Managing Risks and Stop-Loss 

Stop-loss orders in the Rising Three Methods pattern are placed according to the trader’s risk appetite: 

For Lower Risk: The stop-loss order is placed below the low of the confirmation candle (the fifth candle), or below the second small candle within the rest period “consolidation”. 

For Higher Risk: The stop-loss order is placed below the first large candle, or below the low of the consolidation period (below the three small candles, known as the “Recent Swing Low” to avoid premature exit from the trade. 

Double vs. Triple Candlestick Patterns 

The additional candle is the key difference between these two patterns. We previously referred to it as the “confirmation candle.” Although the formation of the triple pattern takes slightly longer compared to the double pattern, it grants the triple pattern added reliability and confirmation, whether for a reversal or a continuation of the trend. 

Overall, both patterns can yield similar results, but in day trading, the pattern’s effectiveness and signal accuracy depend on market factors, such as: 

• Current Market Conditions 

Market Condition	Double Candlesticks	Triple Candlesticks
Trending Markets	Quickly confirm swings, making them ideal for day traders.	Provide additional confirmation, especially in more complex trends, but take longer to form.
Ranging Markets	May struggle to distinguish between real and false breakouts.	More clarity due to the third confirmation candle, which verifies if momentum is breaking out or staying within the range.
Reversals and Continuations	Provide faster signals for detecting reversals or trend continuations.	Avoid false signals and therefore lower risk, making them reliable for traders who focus on accuracy.

• Active Trading Sessions 

Session	Double Candlesticks	Triple Candlesticks	Performance Reason
Asian Session	More effective and frequent	Less clear	Due to a calm market with tight ranges and low volatility, it is ideal for double patterns, while triple patterns are less prominent due to low volume.
European Session (London)	Good performance	Better performance	High trading volume leads to high volatility and liquidity, increasing the formation of triple patterns, which in turn enhances their reliability.
US Session	Good performance	Better performance	During high trading hours, both patterns are effective, but the additional confirmation of the third candle in triple patterns makes their signal stronger, even though the expected movement may be slightly delayed.

• Traded Timeframes 

Timeframes	Double Candlesticks	Triple Candlesticks
Shorter Timeframes	Appear more frequently	Appear less frequently
Longer Timeframes	Less significant	More significant
Expected Movement	Suitable for short-term day trading	Indicates longer-term and more sustainable price movements

Best Triple Candlestick Pattern for Day Trading 

According to analyses and studies, the Three White Soldiers pattern is considered the best and most successful in predicting reversals. 

Accuracy Rates: 

In Uptrends: The reversal accuracy rate for the triple pattern is 82%. 

In Downtrends: The reversal accuracy rate for the triple pattern rises to 84%. 

Studies also show that the success rate for the Three White Soldiers pattern compared to its opposite, the Three Black Crows bearish pattern, is around 80%. 

*Sources for Studies:  

• The Encyclopedia of Candlesticks by Thomas Bulkowski, and Technical Analysis of Stocks & Commodities magazine. 

In nutshell 

Although triple patterns are more accurate and reliable due to the additional “confirmation candle,” they are not a definitive indicator of a pattern’s validity. Confirmation using other technical indicators is the best way to manage risk and minimize potential losses, in addition to using stop-loss orders and continuously monitoring open positions to prepare for any changes in the notoriously volatile market. 

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