Three Line Strike Pattern

Definition

The Three Line Strike pattern is a 4-candle reversal pattern that appears after a clear uptrend or downtrend. It consists of three candles of the same color (bullish or bearish) and a fourth candle of the opposite color that opens near the close of the third candle and closes beyond the open of the first candle, creating a powerful "strike."

How to Identify

• Prior trend: There must be a clear trend (at least 3-5 consecutive candles in the same direction).
• First three candles: Same color, moderate body length, little to no wicks. They form a continuous price move in the trend direction.
• Fourth candle: Opposite color, opens within the range of the third candle (usually near its close), and closes beyond the open of the first candle. This indicates a strong reversal.

[diagram:generic-chart]

How to Trade

For Bullish Three Line Strike

• Entry: After the fourth (bearish) candle closes, wait for a slight pullback and then enter Buy on a breakout above the high of the fourth candle.
• Stop Loss: Place below the low of the fourth candle or below the low of the three bullish candles.
• Take Profit: Use Fibonacci extension or measure the height of the pattern (from low of first candle to high of third candle) to set targets.

For Bearish Three Line Strike

• Entry: After the fourth (bullish) candle closes, wait for a retracement and enter Sell on a breakout below the low of the fourth candle.
• Stop Loss: Place above the high of the fourth candle or above the high of the three bearish candles.
• Take Profit: Similarly, use Fibonacci or pattern height.

Real Example

On EUR/USD H4 chart, three consecutive bullish candles (1,2,3) with long bodies appear, followed by a strong bearish candle (4) that closes below the open of candle 1. This signals a bearish reversal. A trader could enter Sell when price breaks below the low of candle 4, with stop loss above the high of candle 4.

Common Mistakes

• Confusing with a simple three-candle pattern: Three Line Strike requires the fourth candle to close beyond the open of the first candle, not just an opposite color.
• Trading without a clear trend: The pattern is only valid after a strong trend.
• Stop loss too tight: The fourth candle may have long wicks; set a reasonable stop loss to avoid being stopped out.