Bearish Three-Line Strike

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Figure 1. Bearish Three-Line Strike pattern.

Figure 1. Bearish Three-Line Strike pattern.

Japanese name: santeuchi
Forecast: bearish continuation
Trend prior to the pattern: downtrend
Opposite pattern: Bullish Three-Line Strike
Number of candle lines: 4

Construction:

  • First candle
    • a candle in a downtrend
    • black body
  • Second candle
    • black body
    • the opening price is within the previous body
    • the closing price is below the previous closing price
  • Third candle
    • black body
    • the opening price is within the previous body
    • the closing price is below the previous closing price
  • Fourth candle
    • white body
    • candle’s body engulfs all previous black bodies

 
The Bearish Three-Line Strike is a bearish continuation candlestick pattern.

Three first candles have black bodies. They may be formed by any black candles except doji and form lower closes. All of them are located within a downtrend.

The fourth candle is having white body and appears as a long line. It may be one of the following candles: White Candle, Long White Candle, White Marubozu, Opening White Marubozu, Closing White Marubozu. The candle opens below the prior close and closes above the first line's open. In other words, the fourth candle's body engulfs all previous candles. Length of the shadows is of no importance.

Similarly as the bullish counterpart, the Bearish Three-Line Strike is a controversial pattern. Its two last lines form the Bullish Engulfing pattern, which by definition reverses downtrend. This is in opposition to what the Bearish Three-Line Strike forecasts, that is downtrend continuation. Therefore, as usual, every pattern occurrence should be confirmed.

Bulkowski writes that the Bearish Three-Line Strike behaves as a bullish reversal, rather than a bearish continuation. Within his candlestick patterns ranking the pattern is the number one. We are against creating of such rankings for a few reasons. First, the pattern appears very rarely on the charts, which is not allowing to calculate a reasonable statistics. Second, while testing many patterns we clearly see that a given pattern may be very profitable on an asset A, while being a trading disaster on an asset B. Therefore, every pattern should be thoroughly tested in your specific conditions.

 

Figure 2.

Figure 2. Within every Bearish Three-Line Strike occurrence, the third and fourth line form the Bullish Engulfing pattern, which has an opposite forecast. Such cases also exist for other patterns, for example, One-Candle Shooting Star or Two-Candle Shooting Star being in conflict with the Rising Window pattern. This is just one more reason that all pattern occurrences should be confirmed.
The fourth body of every Bearish Three-Line engulfs all its previous candles, which indicates the bulls' strength. In our case, the fourth line is formed at a significantly higher trading volume, which is another bullish accent, forming a support zone. In such situation, it is hard to interpret such pattern as a bearish continuation.
Indeed, two days later the Bullish Engulfing is confirmed by breaking the downtrend.
On the chart, we see how an Opening White Marubozu, being the fourth line of the Bearish Three-Line Strike, acts as a support area a month later.

 

Figure 3.

Figure 3. A Bearish Strong Line, formed at a high trading volume, initiated a downtrend. Such candle will act in the future as a resistance zone.
The candle is confirmed by a Black Candle, also formed at a very high trading volume.
In such market context a Bearish Three-Line Strike pattern appears. Two last candles form a Bullish Engulfing. Its second line (being the 4th line of the Bearish Three-Line Strike), an Opening White Marubozu, is formed at a low trading volume. This indicates that the bulls are not yet fully controlling the stock.
The candle following the Bearish Three-Line Strike occurrence confirms it, and the bears are in control of the market.

 

Bearish Three-Line Strike statistics

Below you can find some Bearish Three-Line Strike pattern statistics calculated by CandleScanner software.

Pattern name: Bearish Three-Line Strike
Scanner settings: daily stocks
Group: S&P500
Number of symbols: 502
Date range: 7/1/1995 - 6/30/2015
Time interval: daily candles
Total number of candlesticks: 2,236,421
Number of occurrences (Bearish Three-Line Strike): 112
Number of occurrences (all candlestick patterns): 638,570
% of occurrences (Bearish Three-Line Strike): 0.02 %
Average frequency: 19,968.0
Efficiency statistics (5 candlesticks testing period)

Efficiency NO DATA FALSE LOW MEDIUM HIGH
Number of
Occurrences
0 28 31 15 38
% of
Occurrences
0.00 % 25.00 % 27.68 % 13.39 % 33.93 %

 

Efficiency statistics (10 candlesticks testing period)

Efficiency NO DATA FALSE LOW MEDIUM HIGH
Number of
Occurrences
0 26 24 18 44
% of
Occurrences
0.00 % 23.21 % 21.43 % 16.07 % 39.29 %

 

10 top best performing symbols

Occurrences Statistics 5 candlesticks testing period
(HIGH efficiency)
10 candlesticks testing period
(HIGH efficiency)
Symbol Number of
Occurrences
Average
Frequency
Number of
Occurrences
% of
Occurrences
Number of
Occurrences
% of
Occurrences
A 1 3,927.0 1 100.00 % 1 100.00 %
CHRW 1 4,455.0 1 100.00 % 1 100.00 %
HSP 1 2,810.0 1 100.00 % 1 100.00 %
MON 1 3,696.0 1 100.00 % 1 100.00 %
PLD 1 4,428.0 1 100.00 % 1 100.00 %
ETFC 2 2,374.5 1 50.00 % 1 50.00 %
ITW 2 2,517.0 1 50.00 % 1 50.00 %
KEY 2 2,517.0 0 0.00 % 1 50.00 %
KMX 2 2,315.5 1 50.00 % 1 50.00 %

 

10 top worst performing symbols

Occurrences Statistics 5 candlesticks testing period
(FALSE efficiency)
10 candlesticks testing period
(FALSE efficiency)
Symbol Number of
Occurrences
Average
Frequency
Number of
Occurrences
% of
Occurrences
Number of
Occurrences
% of
Occurrences
AAP 1 3,419.0 1 100.00 % 1 100.00 %
AMT 1 4,295.0 1 100.00 % 1 100.00 %
CTSH 1 4,285.0 1 100.00 % 1 100.00 %
FTI 1 3,532.0 1 100.00 % 1 100.00 %
SEE 1 4,346.0 1 100.00 % 1 100.00 %
WYN 1 2,253.0 1 100.00 % 1 100.00 %
HAR 2 2,517.0 1 50.00 % 1 50.00 %
KEY 2 2,517.0 1 50.00 % 1 50.00 %
KMX 2 2,315.5 1 50.00 % 1 50.00 %
LUV 2 2,517.0 1 50.00 % 1 50.00 %
Pattern name: Bearish Three-Line Strike
Scanner settings: daily stocks
Group: S&P500
Number of symbols: 502
Date range: 7/1/2010 - 6/30/2015
Time interval: daily candles
Total number of candlesticks: 614,034
Number of occurrences (Bearish Three-Line Strike): 21
Number of occurrences (all candlestick patterns): 166,328
% of occurrences (Bearish Three-Line Strike): 0.01 %
Average frequency: 29,239.7
Efficiency statistics (5 candlesticks testing period)

Efficiency NO DATA FALSE LOW MEDIUM HIGH
Number of
Occurrences
0 4 11 4 2
% of
Occurrences
0.00 % 19.05 % 52.38 % 19.05 % 9.52 %

 

Efficiency statistics (10 candlesticks testing period)

Efficiency NO DATA FALSE LOW MEDIUM HIGH
Number of
Occurrences
0 3 11 4 3
% of
Occurrences
0.00 % 14.29 % 52.38 % 19.05 % 14.28 %

 

10 top best performing symbols

Occurrences Statistics 5 candlesticks testing period
(HIGH efficiency)
10 candlesticks testing period
(HIGH efficiency)
Symbol Number of
Occurrences
Average
Frequency
Number of
Occurrences
% of
Occurrences
Number of
Occurrences
% of
Occurrences
CMA 1 1,258.0 1 100.00 % 1 100.00 %
DO 1 1,258.0 0 0.00 % 1 100.00 %
RIG 1 1,258.0 1 100.00 % 1 100.00 %

 

10 top worst performing symbols

Occurrences Statistics 5 candlesticks testing period
(FALSE efficiency)
10 candlesticks testing period
(FALSE efficiency)
Symbol Number of
Occurrences
Average
Frequency
Number of
Occurrences
% of
Occurrences
Number of
Occurrences
% of
Occurrences
AAP 1 1,258.0 1 100.00 % 1 100.00 %
DGX 1 1,258.0 1 100.00 % 1 100.00 %
EOG 1 1,258.0 1 100.00 % 1 100.00 %

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