Candlestick Patterns Trading: Three White Soldiers and Piercing Line #candlestickpattern #crypto #trading

Newscrypto.io presents Three White Soldiers and Piercing Line candlestick patterns trading.

Three White Soldiers candlestick pattern (Buy):
Three white soldiers is a bullish candlestick pattern that is used to predict the reversal of the current downtrend in a pricing chart. The pattern consists of three consecutive long-bodied candlesticks that open within the previous candle's real body and a close that exceeds the previous candle's high. These candlesticks should not have very long shadows and ideally open within the real body of the preceding candle in the pattern.

Three white soldiers are considered a reliable reversal pattern when confirmed by other technical indicators like the relative strength index (RSI).

How to Trade Three White Soldiers:
As three white soldiers is a bullish visual pattern, it is used as an entry or exit point. Traders who are short on the security look to exit and traders who are waiting to take up a bullish position see the three white soldiers as an entry opportunity.

When trading the three white soldiers pattern, it's important to note that the strong moves higher could create temporary overbought conditions. The relative strength index (RSI), for example, may have moved above 70.0 levels. In some cases, there is a short period of consolidation following the three soldiers pattern, but the short- and intermediate-term bias remains bullish. The significant move higher could also reach key resistance levels where the stock could experience consolidation before continuing to move higher.

Piercing Line candlestick pattern (Buy):
The piercing line pattern consists of two candlesticks, which suggests a potential bullish reversal within the crypto market. This piercing pattern should not be used in isolation but rather in conjunction with other supporting technical tools to confirm the piercing pattern. The piercing line pattern is seen as a bullish reversal candlestick pattern located at the bottom of a downtrend. It frequently prompts a reversal in trend as bulls enter the market and push prices higher.

The piercing pattern involves two candlesticks with the second bullish candlestick opening lower than the preceding bearish candle. This is followed by buyers driving prices up to close above 50% of the body of the bearish candle.

How to Trade Piercing Line:
Since the piercing line is a trend reversal pattern, you would want to do whatever possible to confirm that the reversal is about to occur. In that sense, the most effective way to do so is to use trend reversal technical analysis indicators such as RSI, Stochastic, and MACD.

So, if you have identified the piercing line pattern as we explained above, you need to simply add these indicators to your trading chart and see if they are correlated with the pattern price movement. RSI and MACD confirm the reversal. Still, you should only enter a trade once the candle following the second candle is completed and closes above the previous bullish candle.

Take profit