The 3 Line Strike, also sometimes called the Three Line Strike continuation pattern, is a candlestick charting pattern used by traders to identify potential continuations of existing trends. It can appear in both bullish and bearish forms.
Here's a breakdown of the 3 Line Strike Pattern:
Bullish 3 Line Strike:
Three consecutive bullish candles, each closing higher than the prior day's close.
A large bearish candlestick that opens higher than the previous candle's close but closes below the first bullish candle's open.
This suggests a temporary pullback in an uptrend, potentially followed by a continuation of the uptrend.
Bearish 3 Line Strike:
Three consecutive bearish candles, each closing lower than the prior day's close.
A large bullish candlestick that opens lower than the previous candle's close but closes above the first bearish candle's open.
This suggests a temporary rally in a downtrend, potentially followed by a continuation of the downtrend.
Things to Consider:
While the 3 Line Strike is considered a continuation pattern, it can also precede a trend reversal.
The strength of the reversal signal depends on the location of the pattern within the overall trend. For example, a 3 Line Strike at the peak of an uptrend is more likely to signal a reversal than one that appears in the middle of the trend.
It's important to use the 3 Line Strike pattern in conjunction with other technical indicators and confirmation signals for better trade validation.