Pullback Bar(s)

Three-Bar Pullback

What does it look like?

This bar pattern is easy to identify.

Three consecutive bearish bars form a bullish pullback pattern, and three consecutive bullish bars form a bearish pullback pattern.

Three-Bar Pullback

What does it mean?

When the market is trending, it is hard to sustain a counter-trend pullback. Hence, after a pullback of three bars, the trend is ready to resume.

How do we trade it?

  1. Within a bull trend, wait for three consecutive bearish bars. Then, buy above the next bullish bar.
  2. Within a bear trend, wait for three consecutive bullish bars. Then, sell below the next bearish bar.
Three-Bar Pullback Trading Example

Read: Improving the Three-Bar Pullback

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