The bullish three-line strike candlestick pattern is a dip buy signal that occurs when a large bearish candle follows three smaller bullish candles during an uptrend in price. It is a four-candle pattern where each of the three bullish candles has a higher high and higher low and closes near the price range high each period with small wicks. The fourth candle starts higher than the previous bullish candle but reverses with a big bearish move back below the three previous bullish candles engulfing all of them inside the bearish candle range and then it closes lower than the first bullish candle in the pattern. The fourth candle makes both the low and the high of the four-candle pattern period.
The three-line strike candlestick pattern is a powerfully bullish signal as it provides a good dip buying opportunity due to the selling prices return to the lows of three periods ago during an uptrend. It signals that a possible dip buy opportunity could be happening on a chart in the current time frame.
For dip buyers waiting for lower prices to enter during an uptrend his gives a good support level to get in at as the fourth candle closes at a four-day low in price. A common buy signal for this pattern is at the close of the fourth bearish candle with a stop loss set with a close below the lows of this candle in the four-period candle pattern. The lows of the final bearish candle is a good place to set a stop loss and use to exit for a small loss if price continues lower. This pattern can signal that a low in price is in on the chart and many times a long trade after this trade can be held for a longer period as it goes sideways and eventually trends higher. A trailing stop can be used to let a winner run if it begins to trend higher.
In this 65-minute Nvidia chart after the bullish three line strike pattern occurred price found support near the lows of the large bearish candle and went sideways for five periods before surging to the upside suddenly. Notice price never closed the period below the lows of the large bearish candle and the surge to the upside was brief.
