Unique Three River Bottom candlestick pattern

 Dear traders, we are now familiar with many candlestick patterns. The importance of these patterns in determining entry and exit points and identifying trend reversals is undoubtedly potent. Japanese candlestick patterns are useful tools that reflect the emotional and psychological state of the market. The formation of candlestick patterns in different types gives us insights about understanding the complexity of the market and where prices may go. There are many candlestick patterns that provide clues as to how the market works. In this article, I will share information about one of these patterns, the "Unique Three River Bottom" candlestick pattern.

Three River Bottom pattern

• Topic: Unique Three River Bottom
• Type: bullish
• Trend direction: reversal
• Opposite pattern: Unique Three Mountain Top

What is the Unique Three River Bottom Candlestick Pattern?

The Unique Three River Bottom is a candlestick pattern that indicates a bullish reversal at the end of a downtrend. This candlestick pattern is sometimes referred to as "Unique Three River" or "Three River Bottom."  However, it is quite rare to see on price charts. This candlestick pattern can make it easier for us to understand the direction of trends in the market.

Where Does its Name Come From?

The name "Unique Three River Bottom" comes from a visual concept that resembles the formation of the candlestick pattern. This pattern symbolizes three candles coming together to form a river bottom on the chart. The first candle represents a strong flow, while the second candle changing direction indicates the river moving in a new direction. The third candle reflects the continuation of this new direction in the flow.

How is the Unique Three River Bottom candlestick pattern formed?

The Unique Three River Bottom candlestick pattern appears in a downtrend, signaling a reversal. Following this pattern, prices start to rise as buyers enter the market. This pattern consists of the following three candlesticks:

First Long Bearish Candle: The first candle is typically long and represents a downtrend. The closing of this candle is usually downward and is red in color.

The Second Dipping Bearish Candle: The second candle forms upward within the range of the first candle. Despite initially moving lower than the closing level of the first candle, the second candle retraces upward and closes higher. This indicates that despite the downward movement, the price has started to recover slightly, and buyers are entering the market. Therefore, the second red bearish candle has a long lower shadow.

Small Bullish Candle: As the third candle opens, it moves upward to form a small bullish candle. However, the closing price of this small candle cannot surpass the high of the second candle. This small candle, in green color, indicates that buyers are now active in the market.

This pattern usually forms at the end of a downtrend and indicates that the downward trend in the market is slowing down or stopping. Therefore, the Unique Three River Bottom pattern indicates that the balance of power in the market is changing and that selling pressure is decreasing, while buyers are strengthening.

How to trade with the Unique Three River Bottom candlestick pattern?

The Unique Three River Bottom pattern, when observed in a downtrend, sends a message that selling in the market will decrease, and buying will begin. It is more desirable for this rare pattern to form above a strong support level. In this case, it's time to open a long position. However, pattern confirmation should be done before entering the position. For this, volume indicators and trend following indicators' signals should be closely monitored.

Entry: Place the entry point above the closing price of the third candle.

Stop-Loss: When determining the stop loss level, it may be logical to set it below the candles forming the pattern, especially below the second candle.

Target: Multiple methods can be used to set a target; for example,risk-reward ratios, fibonacci retracement levels, or a resistance point.

Below, you can see an example of a trade made with the "Unique Three River Bottom" candlestick pattern on the Bitcoin/Dollar chart. This pattern is typically a bullish reversal formation that signals the end of a downtrend and the beginning of a significant upward movement. On the chart, we first observe a long bearish candlestick, followed by smaller candlesticks closing within the range of this large bearish candlestick. The last of these smaller candlesticks is usually a doji or a candlestick with a very small body, indicating that the price is no longer likely to decline further. Finally, the fourth candlestick closes above the opening level of the large bearish candlestick, confirming the start of an upward trend. Observing such a pattern can be considered a buy signal for any trader, as it indicates a market reversal.

Bullish Reversal with Three River Bottom

Let's Consider: When trading in the Forex market, we should not expect every trade to end perfectly. As always, relying solely on a single candlestick pattern can lead to undesirable outcomes. The possibility of the "Unique Three River Bottom" candlestick pattern producing false signals should not be overlooked. A more reliable strategy is to consider fundamental analysis, verify with other technical analysis tools and indicators.