Unique Three River

What Is a Unique Three River?

The unique three river is a candlestick chart pattern that predicts a bullish reversal, in spite of the fact that there is some evidence that it could act as a bearish continuation pattern. The unique three river pattern is made out of three price candles. On the off chance that the price moves higher after the pattern, it is viewed as a bullish reversal. On the off chance that the price moves lower after the pattern, it is a bearish continuation pattern.

Key Advisors

• The unique three river pattern is made out of three candlesticks, in a specific sequence: a long descending real body, a hammer that makes a new low, and a third candle with a small vertical real body that stays inside the scope of the hammer.
• Customarily, the pattern shows a bullish reversal yet the price can actually move either bearing after the pattern happens.
• Traders frequently utilize the heading of a confirmation candle, which is the fourth candle, to signal which course the price is probably going to move following the pattern.

What Does the Unique Three River Candlestick Pattern Tell You?

The unique three river is a candlestick chart pattern that meets the following criteria:

1. The market is in a bearish downtrend.
2. The main candle has a bearish long real body (close lower than open).
3. The subsequent candle is a hammer with a lower shadow that sets a new low.
4. The third candle has a short white body (close above open) that is below the real body of the subsequent candle.
5. The third candle doesn't surpass the high or low of the subsequent candle.

The long real body of the principal candle shows that bears control the predominant trend while the hammer in the subsequent candle recommends that bulls are recapturing strength following a protracted decline. In the third candle, the open comes in higher than the prior time frame's low and the small white body gives indications of stability and the potential for a move higher.

These dynamics recommend a possible bullish reversal from the downtrend, despite the fact that there is some evidence that it all the more frequently leads to a bearish continuation. Subsequently, traders genuinely should consider the candlestick pattern inside the setting of different forms of analysis, for example, technical indicators or chart patterns throughout a longer time span.

Unique Three River Trading Psychology

The wide reach decline on the primary trading day drops the security to a new low, outlining that bears control price action. Debilitated bulls persevere on the second trading day, switching the security after it hits a new low (below the principal candle). Their buying power lifts the security into a close in the upper half of the main candle's reach. The security opens lower on the third trading day, signaling a reduction in bull power; in any case, bears fail to capitalize on that weakness, creating an uncertain session inside the trading range of the subsequent candle.

This behavior might show that bear power is fading, making way at a bullish cost thrust on the fourth trading day.

Trading the Unique Three River Pattern

Trading candlestick patterns regularly require confirmation. Confirmation is given on the fourth candle, in this case, or the candle after the pattern finishes. On the off chance that the price moves higher on the confirmation candle, this affirms the bullish reversal and a trader could take a long position with a stop loss below the low of the subsequent candle.

In the event that the price proceeds lower on the fourth candle, this would nullify the bullish bias and on second thought show the potential at the cost to drop. A trader could take a short position with a stop loss over the high of the subsequent candle.

The price might move one course and afterward the other, stopping the trader out, however at that point triggering a trade in the other heading. Entering a subsequent time might be beneficial since a false breakout the other way could fuel a strong price move in the new course.

Illustration of How to Use the Unique Three River Candlestick Pattern for Trading

Because of the specifics of the pattern, seeing one is relatively rare compared to more normal candlestick patterns like engulfing patterns.

When the psychology of the pattern is perceived, a few traders will trade variations of the pattern as long as the overall psychology stays intact. For instance, the subsequent candle may not be a hammer but instead a long-legged doji. The third candle might move somewhat lower rather than higher (close relative to open). Even with these differences, the overall pattern psychology stays intact, particularly on the off chance that there is a strong confirmation candle (in one or the other bearing) following the formation.

The following variation on the unique three river pattern happened in the gold market during an uptrend. The actual pattern was the descending correction inside the uptrend. Following the pattern the price continued moving higher.

The pattern doesn't give a profit target. The trader must decide how and when they will take profit.

Difference Between the Unique Three River and the Three Inside Up Candlestick Patterns

Both of these candlestick patterns are made out of three candles, yet there are a few differences in how the patterns are framed. In the three inside up reversal pattern, the main candle is a descending candle with a long real body. The subsequent candle is completely inside the primary candle, and it has a small vertical real body. The third is an up candle that closes over the subsequent candle.

Limitations of the Unique Three River Candlestick Pattern

The fundamental limitation of the pattern is that occasionally the price moves higher after it, and at times the price moves lower. This means traders ought to hang tight for confirmation, which comes from the fourth candle, to signal which course the price will head next.

The pattern likewise doesn't have a profit target, so some other method is required for taking profit.

The unique three river pattern is likewise very rare. It happens only very rarely, such countless traders opt to trade slight variations of the patterns, despite the fact that trading random variations may not deliver great outcomes over many trades since such random variations might not have been as expected backtested for profitability.