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WHAT IS THE BULLISH 3 DRIVE PATTERN?
Flag chart patterns 6 minutes. Bullish rectangle 5 minutes. Bearish rectangle 6 minutes. Advanced chart patterns. Gartley pattern an hour. Bat pattern an hour. Butterfly pattern an hour. Crab pattern 44 minutes. Three drives 5 minutes. Cup and handle 4 minutes.
Trading Patterns – What every day trader must master to be successful
Rounded top and bottom 7 minutes. Enrol into this course now to save your progress, test your knowledge and get uninterrupted, full access. Enroll for free. About Contact. The traditional method for exiting a position using this formation is to close the trade at the However, my preferred method is to scale out using two targets. The first target for the bullish three drives pattern is the swing low seen at the start of drive three.
Three Drives — Harmonic Patterns — Education — TradingView
The second target would be the swing low seen at the start of drive two. These targets tend to offer the best combination of win rate coupled with a favorable risk reward ratio. The bearish three drives pattern is the inverse of the bullish three drives version.
- The Bullish 3-Drive Pattern (3-drives to a bottom).
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- “Three-Drive” Pattern (“Three Indians”)?
The rules are the same, with the exception that, the bearish three drives variety is seen within a downtrend. On the illustration above, you can see what the bearish variety of the three drives pattern looks like.
Notice how the first and second corrective legs within the bearish structure retraces the previous impulsive legs by the This creates an idealized version of the bearish three drives pattern. At the termination of the third and final drive, the market will reverse the prior downtrend. This is because the markets do not provide for idealized scenarios, and as such, applying some good old-fashioned common sense during the evaluation process is a must. Specifically, what I mean to say is that if the required fib ratios for the three drives pattern fits all but a few measurements, by a slight amount, and those measurements that are off slightly do not inherently distort the overall structure of the pattern, it would make practical sense to continue labeling the structure as a three drives pattern.
Obviously, there is a fine line in the use of discretion here. While we do not want to be overly rigid in our assessment, we cannot be too liberal in our labeling rules either. Referencing the image above, you will again note that we will utilize a two tiered target following the termination of the three drives pattern. The first target, the initial target point, will be the swing high of the third and final drive within the pattern.
And our second target will be the swing high of the second drive within the pattern. These levels represent areas of resistance where upside price action will be challenged. As such they represent logical levels for taking profits. We have dissected both the bullish and bearish three drives pattern, and have discussed potential target zones for the pattern.
This includes an entry mechanism, a confirmation filter , and risk containment element in the form of a stoploss. We have described the Fibonacci ratios that are most important within this harmonic structure. Once we have recognized a potential three drives pattern, we will need to go through a repeatable workflow in evaluating the viability of the trading set up.
Firstly, we will want to confirm that an established trend exists prior to the development of the three drives pattern. Once we have confirmed this, then we can move on to the next step. As a requirement for entering into the three drives set up, we will set up a filter that helps establish that the current market is trading at overextended levels. Essentially, we will incorporate the RSI, the Relative Strength Index and look for a reading of at least 70 or above during the bullish three drive pattern.
This will validate an overbought market condition. Similarly, we will require an RSI reading of 30 or lower during the bearish three drives pattern, which will help validate the presence of an oversold market environment. Once the RSI filter has been confirmed, then we will look to execute our entry in the final stages of the third Drive within the pattern. We know that in this pattern both the second drive and the third Drive will extend to this level before pulling back.
As such, our strategy will call for entering into that final push just before an imminent reversal. This will serve as the three drives pattern signal. When our entry order is executed, will need to immediately place a stop loss order on our trade. This level will typically act as hidden resistance following the three drives pattern in an uptrend, and will provide an area of support following the three drives pattern in a downtrend. As such, we will use that tendency as a means for placing a logical stoploss around this trade setup. As for the take profit levels, we know that we will be using a tiered exit plan.
The first take profit point will be the start of drive three, and the second and final take profit point will occur at the start of drive two.