This pattern is formed by three adjacent white long candlesticks followed by a black candlestick driving prices back to the point where they were at the beginning of the pattern. If there was a strong bullish trend before the pattern, then it should continue.

Recognition Criteria:

1. Market is characterized by downtrend.
2. We see three consecutive long white candlesticks with consecutively higher closes.
3. Then we see a black candlestick opening at a higher level and closing below the open of the pattern’s first day.

Explanation:

Bullish Three Line Strike Pattern appears in a market characteristically in uptrend as evident in the three white candlesticks. The fourth day opens in the direction of the trend, however it then moves in opposite direction due to profit taking. There may be a reevaluation of the market direction now. However we know that this move completely eradicated the gains of the previous three days. If the previous trend was really strong, this may now be interpreted as a temporary setback caused by profit taking. The last day of the pattern shows liquidating which may now give the upward trend a new strength to continue in the previous upward direction.

Important Factors:

A confirmation on the fifth day in the form a white candlestick, a large gap up or a higher close is definitely required.