Warning of the Three-Candle Pattern in BTC and ETH Price Movements

Recently, many traders have noticed a special technical pattern in the price movements of Bitcoin and Ethereum, which was followed by a decline. This pattern is known as the “Three White Soldiers” in technical analysis, and it is an important signal of trend reversal. When this pattern appears in an uptrend, it often indicates that the market may shift from an upward movement to a correction or a downtrend.

Understanding the Three White Soldiers’ Three Key Features

The Three White Soldiers is a classic technical chart pattern composed of three consecutive high points. The first candlestick creates an upward high, representing bullish momentum. The second candlestick rises again, surpassing the first high, showing a stronger upward trend. However, by the third candlestick, although the price continues to rise, it fails to surpass the second high and may even be close to the first high. This “diminishing strength” is the core characteristic of the Three White Soldiers pattern.

Visually, this pattern resembles a head and shoulders structure— the second candlestick is the tallest “head,” while the first and third candlesticks are the lower “shoulders” on either side. Because of this distinctive outline, the Three White Soldiers pattern is highly regarded in technical analysis.

Market Signals Revealed by the Three White Soldiers

When the Three White Soldiers pattern appears during price movement, it conveys a key message: bullish momentum is waning. In the first candlestick, strong buying pressure pushes the price higher; by the second candlestick, although the price hits a new high, the buying strength begins to weaken; by the third candlestick, even if the price continues upward, it is no longer able to break through the previous high, indicating that selling pressure is gradually accumulating, and the willingness to short the market is increasing.

This ebb and flow of bullish and bearish forces ultimately cause the uptrend to lose support, and the price faces the risk of correction or reversal. This explains why BTC and ETH often experience a decline after forming the Three White Soldiers pattern.

Key Points for Investors to Recognize and Respond to the Three White Soldiers

For traders, the key to identifying the Three White Soldiers pattern lies in observing the relative positions of the three highs and their corresponding trading volumes. If the volume at the third high is significantly lower than at the first two highs, the reversal signal is more reliable. Once the pattern is confirmed, investors should closely monitor support levels and prepare for potential risk adjustments. Experienced traders often consider reducing positions or adjusting their strategies when the third candlestick fails to surpass the second high, thereby avoiding subsequent declines.

The appearance of the Three White Soldiers pattern does not necessarily guarantee a price decline, but it serves as a warning for market participants to stay alert and reassess the health of the current trend. In trading mainstream cryptocurrencies like BTC and ETH, learning to recognize and respect such technical patterns can help traders better grasp market dynamics.