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Technical analysis with the unique three river candlestick pattern

Candlestick patterns are like the footprints of market sentiment in the world of trading. They offer valuable clues about where prices might head next, helping traders make informed decisions. 

Recognizing these patterns is crucial for anyone looking to navigate the complex landscape of financial markets. One such pattern that stands out is the Unique Three River Candlestick Pattern. This pattern, with its distinct formation of three consecutive candlesticks, holds the promise of revealing potential reversals in market trends. 

In this article we will break down this special formation into its various parts, ways in which it can be identified and strategies used for trading based on it

Understanding unique three river candlestick pattern

The Three River Candlestick Pattern is a rare but important pattern in technical analysis. It is made up of three candlesticks that form a particular sequence and indicate a possible change in market direction.

This pattern starts with one long black (or red) candlestick which shows strong bearish movement. Following this are two smaller candlesticks. The second one is usually small-bodied either black or white, gapping lower from the first one; while the third one usually opens below the second one but closes above its mid-point thereby erasing losses made by previous two candles.

This pattern suggests a reversal from a bearish trend to a bullish one. It indicates that despite initial selling pressure (represented by the first candlestick), the bulls are gaining strength, leading to a potential shift in market sentiment. Traders often look for confirmation signals alongside this pattern to validate its significance before making trading decisions.

How to identify the unique three river candlestick pattern

Unique three-river patterns identification is straightforward. Look for the following criteria:

  • The pattern consists of three candlesticks.
  • The first candlestick is a long bearish (red or black) candle.
  • The second candlestick is a short bullish (green or white) candle that opens below the close of the first candle and closes above the high of the first candle.
  • The third candlestick is a long bullish (green or white) candle that opens above the close of the second candle and closes near or above the close of the first candle.

When these conditions are met, it signifies the formation of the Unique Three River Candlestick Pattern.

Unique three-river trading psychology

The fourth candle in the series is what confirms the unique three-river pattern. The higher price of confirmation candles means that the pattern is bullish reversal hence indicating long positions to be taken by traders. Traders can place stop loss below the second candle’s low.

When it comes to the fourth candle, if prices drop instead of showing signs of bullish reversal, it should be expected that they will continue falling further. In this case, one should take a short position with a stop loss above the second candle’s high.

Now, let’s understand the unique three river candlestick pattern trading.

Trade using unique three river candlestick pattern

Understanding the psychology of three distinct river patterns is crucial because they have their own specificities:

  • First candle: A long downward real body
  • Second candle: A hammer that makes a new low
  • Third candle: A candle with a small upward real body that stays within the range of the hammer 

In order to keep psychology as clean as possible, some traders use variations of a pattern. 

For instance, instead of a hammer, the second candle turned out to be a long-legged doji. Instead of moving up from the top, the third candle moves slightly down. But still general trade psychology does not change regardless of these distinctions.

Difference between the unique three-river and the three inside-up candlestick patterns

Here’s a concise comparison between the unique three-river patterns vs inside-up candlestick pattern:

AspectUnique Three RiverThree Inside Up
TrendOccurs during a bearish downtrendOccurs during a bearish downtrend
First CandleBearish and largeDownward with a long real body
Second CandleBearish with a lower low than the firstEntirely within the first one and has a slight upward real body
Third CandleSmall and bullish, with an open not lower than the second candle’s lowNot specified
Fourth Candle (Confirmation)If it closes higher, it confirms the bullish reversal. If the price drops, it indicates a bearish continuationNot specified
Trading StrategyIf the fourth candle closes higher, place a buy trade. If the price drops, consider taking a short position

Limitations of the unique three-river candlestick pattern

While the unique three river candlestick pattern can be a powerful tool in a trader’s arsenal, it’s essential to recognize its limitations to avoid potential pitfalls in trading decisions. Here are some unique three river candlestick pattern limitations:

  1. Subjectivity: Like many candlestick patterns, the interpretation of the Unique Three River Pattern can be subjective. Different traders may interpret the pattern differently, leading to inconsistent trading decisions.
  2. Reliability: While the unique three river pattern can indicate potential trend reversals, it is not infallible. Market conditions, news events, and other factors can influence price movements, making it risky to rely solely on this pattern for trading decisions.
  3. Confirmation needed: It’s crucial to confirm the unique three river pattern with other technical indicators or analysis methods before making trading decisions. Relying solely on this pattern without confirmation can lead to false signals and losses.
  4. Market noise: In volatile or choppy markets, the Unique Three River Pattern may be less reliable due to increased market noise. Traders should exercise caution when trading this pattern in such conditions.
  5. Limited application: The unique three river pattern may not occur frequently across all financial instruments or timeframes. Traders should be aware of its limited applicability and adapt their trading strategies accordingly.


The bullish unique three river candlestick pattern is a rare sign of a trend reversal. It starts with a big black candle, followed by another black candle with a higher closing price. 

The third candle is white and small. This signals that selling pressure is easing, and buyers are stepping in. To confirm the trend reversal, we need to see another positive sign on the fourth day, like a white candle with a higher closing price or an upward gap. 

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How can I spot this pattern on a chart?

Look for three specific candlesticks lined up in a row. Each candlestick has a unique shape and position that forms the pattern.

What does this pattern indicate?

This pattern suggests a potential reversal in the current market trend. It’s like a signpost telling you that the winds might be changing.

Can I trust this pattern alone to make trading decisions?

While the Unique Three River Candlestick Pattern is powerful, it’s always a good idea to confirm it with other indicators or analysis techniques for better accuracy.

Is this pattern only useful for predicting upward movements?

No, it can indicate both bullish (upward) and bearish (downward) reversals. It’s versatile like that.

How can I use this pattern in my trading strategy?

You can use it to time your entry or exit points in trades. When you see this pattern forming, it might be a good opportunity to make a move in the market.

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