Detecting Three-Line Strike Candlestick Reversals

Summary

This document explains an indicator for detecting the three-line strike candlestick pattern. It identifies three consecutive candles in one direction followed immediately by a larger candle in the opposite direction. Three rising candles followed by a larger bearish candle mark a possible bearish reversal; three falling candles followed by a larger bullish candle mark a possible bullish reversal. The indicator plots arrows for these setups and can optionally mark simpler bullish or bearish engulfing candles.

The accompanying ProRealTime logic compares candle direction and body size, then checks the three-candle sequence before displaying a signal. The document says the indicator can be used across timeframes but considers daily and higher charts more reliable. It provides no empirical results or quantified reliability estimates. Signals may be premature or fail, particularly in volatile or sideways markets, so the author suggests confirmation with tools such as RSI, moving averages, or volume. A candlestick pattern is a signal to evaluate, not evidence of a guaranteed trend change.

Key ideas

• A three-line strike consists of three consecutive candles in one direction followed by a larger opposite-direction candle.
• The bullish and bearish versions mark possible reversals after falling and rising sequences, respectively.
• The indicator can also display simple engulfing candles through optional settings.
• The document recommends caution in volatile or sideways markets and suggests confirmation with other indicators.
• No performance testing or quantified success rate is supplied.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.