Dear Friends,
It's an exciting experience for me to share the knowledge I
have as a trader with you. I wish for you to achieve the financial freedom you
dream of, step by step in the world of financial trading. This journey may take
some time, but what matters is reaching a good outcome in the end. Technical
analysis skills are a key factor that will carry you forward in your trading
life. Now, I'm going to tell you about a new candlestick pattern. I'm happy to
share our article on the "Unique Three Mountain Top" candlestick
pattern with you.
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| Three Mountain Top pattern |
- Topic: Unique Three Mountain Top
- Type: bearish
- Trend direction: reversal
- Opposite pattern: Unique Three River Bottom
What is the Unique Three Mountain Top candlestick pattern?
"Unique Three Mountain Top" is a candlestick pattern that indicates the end of an uptrend and a possible reversal. This
pattern indicates that prices are struggling to continue rising and the
strength of the uptrend is diminishing. In other words, prices reach a peak and
lose the energy required to move higher. When prices reach this peak and are
ready to move downward, this candlestick formation could mark the beginning of
the end of the uptrend.
Where does its name come from?
This pattern is sometimes also referred to as the
"Bearish Unique Three Mountain Top" and is sometimes simply known as
"Unique Three Mountain" or "Three Mountain Top." Now, you
might be wondering where these names come from, dear readers? The name of the
Unique Three Mountain Top pattern usually comes from its formation of three
peak-like formations on the chart. More simply put, this pattern consists of
three candles that visually resemble a range of mountains. As the pattern is
often seen at the peak of an uptrend, and each top is at a different level than
the previous one, it creates a unique three-mountain image on the chart. Hence,
it is named as such.
How is the Unique Three Mountain Top candlestick pattern formed?
The Unique Three Mountain Top candlestick pattern appears in
the final stage of a bullish trend. During this period, the market approaches
the last stop of the uptrend, and a reversal or correction becomes inevitable.
In this situation, the bulls give up, making way for the bears to take over. The
pattern consists of three candles:
First Bullish Candle: The first candle is a long-bodied
green bullish candle. This candle usually closes upwards and may have short
shadows or sometimes no shadows at all.
Second Bullish Candle: The second candle is also a green
bullish candle. However, despite initial upward movement in prices, there is
later a pullback, resulting in a long upper shadow on the second candle.
Small Bearish Candle: The third candle is a small-bodied
bearish candle. This candle is red and signifies a downward movement,
considered a signal of price decline.
This pattern is a candlestick formation consisting of three
candles (from the top) and indicates that the trend is slowly weakening. Afterwards,
there is a high probability of a reversal in the uptrend.
How to trade the Unique Three Mountain Top candlestick pattern?
The formation of the Unique Three Mountain Top candlestick
pattern in a bullish trend indicates that prices cannot find the necessary support
to continue moving upwards. In this situation, sellers may enter the market and
cause prices to fall. However, if the pattern forms at a resistance level, it
can provide a stronger signal. After the pattern is confirmed, a short position
can be opened.
Short (Selling): Selling can be done below the closing price
of the third candlestick in the pattern.
Stop Loss: It may be appropriate to set a stop-loss level
slightly above the highest point where the pattern formed.
Target: In setting a target strategy, technical analysis
tools such as support levels, previous low points, or moving averages are often
used.
When you look at the following trading example, the
"Unique Three Mountain Top" candlestick pattern on the US Dollar
Index chart clearly shows that the uptrend has ended and reversed. The three
peaks in the pattern indicate weakening buyer momentum and increasing selling
pressure. The final peak, in particular, suggests that prices are losing their
upward momentum. The "Unique Three Mountain Top" pattern is clearly
visible on the U.S. Dollar Index (USDX) chart, signaling the end of an uptrend
and a likely reversal in the market. In the trading example below, you can see
how this pattern is followed by a break of the support level, leading to a
clear downtrend. Patterns like these provide valuable insights for traders
about the looming market direction.
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| Unique Three Mountain Top Pattern on USD Index. |
Let me note: In the Forex market, unexpected price fluctuations are possible. Therefore, risk management strategy should always be our priority. Like any candlestick pattern, the "Unique Three Mountain Top" pattern may not provide definitive results on its own. Thus, it is strongly recommended to use it in conjunction with other technical analysis tools and indicators.