Three-Line Strike Patterns
Overview
The three-line strike is a four-candle pattern where three consecutive candles move in one direction, followed by a single large candle that engulfs all three. Despite appearing as a reversal, statistical analysis shows the bullish three-line strike actually has a high probability of continuing the prior uptrend, making it a continuation signal. The bearish variant behaves similarly as a continuation of the downtrend.
Key Concepts
Three consecutive candles of the same colour establish directional momentum. The fourth candle opens in the direction of the trend but reverses to engulf all three prior candles. The bullish version statistically acts as a continuation pattern despite the bearish fourth candle. Volume analysis on the fourth candle helps distinguish continuation from genuine reversal. Context within the broader trend structure is essential for correct interpretation.
Entry Signals
Enter in the original trend direction after the fourth candle's engulfing move completes. Wait for the next candle to confirm continuation of the prior trend. Look for the pattern within an established trend, not at extremes. Volume should decrease on the strike candle relative to the trending candles.
Exit Signals
Stop beyond the extreme of the strike candle. Target the next measured move in the trend direction. Exit if the strike candle's level is decisively broken with follow-through. Partial profit at the prior swing high or low.
Best Timeframes
4H, Daily
Pro Tips
The three-line strike is counterintuitive because the large engulfing candle looks like a reversal, but research across over fifty thousand occurrences shows it acts as continuation roughly eighty-three percent of the time in uptrends. Always consider the broader trend context and avoid trading the pattern in ranging markets where continuation statistics break down.
More Topics in This Category
Doji & Spinning Tops
Doji and spinning top candles signal indecision between buyers and sellers. A doji has nearly identical open and close prices, while a spinning top has a small body with long wicks on both sides. These patterns are most significant at the end of extended trends where they can foreshadow reversals.
Continuation Triangles
While not strictly a candlestick pattern, continuation triangles (ascending, descending, symmetrical) are multi-candle patterns where price contracts between converging trendlines. Breakouts from triangles tend to continue the prior trend. Triangles are measured-move patterns — the target equals the height of the triangle projected from the breakout point.
Inside Bars
An inside bar is a candle completely contained within the range (high to low) of the previous candle. It represents a contraction of volatility and indecision. Inside bars are used as breakout setups — traders wait for price to break above or below the inside bar's range (or the 'mother bar' range) to enter.
Hammer & Hanging Man
The hammer and hanging man are single-candle patterns with small real bodies and long lower shadows (at least 2× the body). A hammer appears at the bottom of a downtrend (bullish), while a hanging man appears at the top of an uptrend (bearish). The long wick indicates that sellers pushed price down but buyers recaptured ground.