Unveiling the Top 3 Candlestick Formations: Bullish and Bearish Scenarios

The Morning and Evening Star Formations

These triple-candle configurations signal the potential conclusion of the prevailing market direction.

In a Morning Star formation, the initial candle exhibits bearish characteristics, followed by a second candle with minimal body size. The third candle then demonstrates a shift in market sentiment. Conversely, the Evening Star pattern begins with a bullish candle, proceeds with a small-bodied second candle, and concludes with a third candle indicating a trend reversal, as illustrated in the accompanying visual.

The Three White Soldiers and Black Crows Patterns

The White Soldiers formation emerges when three substantial bullish candles materialize in succession. This pattern typically manifests after a downward trend, suggesting an impending reversal. It's a robust indicator, often appearing subsequent to an extended decline and a period of price consolidation. The second candle should surpass the body of its predecessor in size, while the final candle ought to match or exceed the dimensions of the second.

Conversely, the Bearish Three Black Crows pattern serves as the antithesis to the White Soldiers configuration. It's characterized by the appearance of three bearish candles at the culmination of a prolonged uptrend, hinting at a potential reversal. The body of the second candle must exceed that of the first, with the third candle equaling or surpassing the size of its predecessor.

The Three Inside Up and Inside Down Formations

The Three Inside Up pattern surfaces at the conclusion of a downtrend, confirming an ongoing reversal. It consists of a sizable bearish candle at the trough of a decline, succeeded by a second candle reaching the midpoint of the first. The pattern culminates with a third candle closing above the peak of the initial candle.

The Three Inside Down formation, conversely, follows an uptrend and suggests an imminent reversal. It commences with a substantial bullish candle, followed by a second candle touching the midpoint of the first. The pattern concludes with a third candle closing below the lowest point of the initial candle, signaling an impending trend shift.