The Secret Weapon of Smart Traders: How to Use the Three White Soldiers in Medium-Term Trading

Why Most Traders Overlook This Powerful Pattern (And Why You Shouldn’t)

Imagine you’re watching a suspense movie. The hero is cornered, the villain is gloating, and then—bam! The tables turn. That’s exactly what the Three White Soldiers pattern does in Forex: it signals a reversal so strong, it’s like the market just decided to become a superhero overnight.

Yet, most traders either overlook this formation or misinterpret it. Some even confuse it with fake reversals and end up making trades that nosedive faster than a cheap meme coin. But if you know how to read the Three White Soldiers correctly, especially in medium-term trading, you can ride the momentum like a seasoned pro.

In this guide, we’ll break down the hidden insights, pro-level tactics, and underground trends that can help you capitalize on this powerhouse pattern.

What Exactly Are the Three White Soldiers?

This pattern consists of three consecutive bullish candlesticks that follow a downtrend. Each candle opens within the body of the previous one and closes higher, showing strong buying momentum.

Key Characteristics:

• Each candle closes near its high, with minimal upper wicks.
• The opening price of each candle remains inside the previous candle’s body.
• The pattern emerges after a clear downtrend, signaling a bullish reversal.

Why Is This Pattern So Powerful?

This pattern is one of the strongest bullish reversal signals because it shows increasing buyer confidence over three sessions. Institutional traders take notice, liquidity shifts, and smart money flows into the trend—giving you an opportunity to catch a serious move.

But here’s where most traders get it wrong: they jump in too early.

Medium-Term Magic: How to Use Three White Soldiers Like a Pro

Most traders misuse this pattern by treating it as an instant buy signal. Instead, let’s apply a next-level strategy tailored for medium-term traders who want to catch big moves without getting whipsawed.

Step 1: Confirm the Context

Before trusting the pattern, analyze these factors:

✅ Support Zone: Are the three soldiers forming at a major support level?

✅ Volume Surge: Is volume increasing with each bullish candle? If yes, institutions are involved.

✅ Divergence Check: Use RSI or MACD to ensure there’s bullish divergence.

Step 2: Entry Timing – The Hidden Trick Most Traders Miss

Instead of entering right after the third candle, wait for a minor pullback (usually 38.2% – 50% Fibonacci retracement of the three-candle move). Why? Because institutional traders love to shake out weak hands before continuing the trend.

Pro Tip: Set limit orders at the retracement zone instead of chasing the move.

Step 3: Setting Up the Trade Like a Pro

• Stop Loss: Below the second soldier’s low (gives more protection than placing it under the first candle).
• Target: Use the ATR (Average True Range) multiplier method for dynamic profit-taking. Aim for at least 2.5x the risk.
• Trailing Stop: Once price moves 1.5x your risk, tighten your stop below each daily low.

Case Study: EUR/USD 2023 – Three White Soldiers in Action

In October 2023, EUR/USD formed a perfect Three White Soldiers pattern near the 1.0450 support level. But smart traders who waited for a pullback before entering got a much better risk-reward setup. The pair rallied over 300 pips in the following weeks—proving once again that patience pays.

How to Filter Fake Setups Like a Ninja

Not all Three White Soldiers patterns are reliable. Here’s how to spot fake-outs:

❌ Low Volume: If volume isn’t rising, it’s a weak move.

❌ Long Upper Wicks: If candles have big upper shadows, selling pressure is creeping in.

❌ Overbought Conditions: If RSI is already above 70, the move may be exhausted.

Solution? Combine this pattern with market structure analysis to avoid getting tricked by false breakouts.

Pro Tactics: Boost Your Edge with Additional Confirmations

If you want next-level accuracy, stack the Three White Soldiers pattern with:

• Moving Averages: A crossover of the 20 EMA above the 50 EMA strengthens the signal.
• Order Flow Analysis: Look for bullish absorption signals in footprint charts.
• Currency Strength Analysis: Ensure the currency you’re buying is fundamentally strong.

Final Thoughts: Why This Strategy Gives You an Edge

The Three White Soldiers is one of the most reliable reversal patterns—but only when used correctly. By waiting for a pullback, confirming volume trends, and filtering weak setups, you can turn this classic pattern into a medium-term money-making weapon.

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Key Takeaways:

✅ Three White Soldiers is a powerful reversal pattern—but only when confirmed by volume and context.

✅ Wait for a pullback instead of rushing in to avoid getting trapped.

✅ Use additional confirmations (support levels, moving averages, order flow) to filter out fake setups.

✅ Trade with discipline—set logical stop-loss levels and aim for a minimum of 2.5x risk-reward.

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Image Credits: Cover image at the top is AI-generated