In the previous article we learned about the ABCD candle pattern, and inside it also contains the 3 drives patterns, but this time we will try to review it more deeply, but you can read again to learn more about ABCD pattern.
Harmonic patterns often appear in the forex market if we pay close attention. Studying harmonic patterns will provide opportunities for traders to gain profits in the forex market with good accuracy.
The 3-drive pattern is a pattern similar to the ABCD pattern. But what distinguishes it is that the 3 drives pattern has four low prices and two retracement levels.
This pattern also consists of two types, namely the bearish three drive pattern and the three drive bull pattern. The basic concept is that this pattern forms three legs and has two corrections or retracements. But in different directions for each pattern.
The patterns that are formed from market dynamics may sometimes be similar, but they have not fully met the criteria to be a signal based on this three-drive pattern so that the requirements to determine this pattern are valid signals must be understood.
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Bullish three-drive pattern
The bullish three-drive pattern is a pattern that gives a signal for a reversal that previously occurred twice a retracement and gives a buy signal.
To recognize this pattern you must be very careful because with that accuracy you will get a pattern that matches the requirements.
From the picture above, you can see that point A must be a correction as far as 61.8% of Drive 1. Likewise, point B must be a correction as far as 61.8% of Drive 2.
Then Drive 2 itself must be an extension of 127.2% from the first correction (1 to A). When Drive 3 is formed, you can consider opening buy, and put your stop loss accordingly.
It is important for you to pay attention, before deciding to open a buy position, try to check whether these requirements are met:
- The time needed for the formation of Drive 2 must be the same as the time needed for the formation of Drive 3.
- The time needed to form correction A must be the same as the time needed to form correction B.
Bearish three drive pattern
The bearish pattern basically has the same pattern as the bullish pattern. Except that the bearish pattern is the opposite of the bullish pattern.
If you notice that this pattern is a reversal signal to sell. Previously the price movement formed a bullish pattern with a twice correction.
To determine this bearish signal according to the requirements of the 3 drives patterns then you need to have carefulness in determining and using the Fibonacci retracement. For this bearish pattern, requirements are the same as the bullish pattern.
The time required for the price to move to drive 2 must be the same as the time required by the price to move to drive 3. Likewise with the correction or retracement time points A and B must be the same.
Bearish 3-drive pattern rules
- The key to this pattern is Drives 2 and 3 must be 127.2% or 161.8% extension of the retracements A and C.
- Retracements A and C to 61.8% or 78.6% of the previous drive.
- In a highly trending market, a retracement might be 38.2% or 50%.
- The retraction times of A and C must be symmetrical. this rule also applies to extensions (2nd & 3rd drives)
- Large price differences at any time can signal that patterns are wrong. Traders should wait for further confirmation that a price peak is in progress.
Three drive pattern target profit and stop-loss
Determining the profit target using these three drive pattern.
You can use Fibonacci by drawing from the highest line to the lowest and determining the valid three drive pattern or not.
In addition to determining the target, profit is also important that you always trade by using the corresponding position size with money management. Stop-loss is also important as part of risk management. For target profit, you can determine at level 61.8 and stop loss below leg number 3.
3 drive pattern indicator
Using this indicator to determine the three drive patterns will greatly help traders. To look for three drive patterns without calculations using the manual Fibonacci.
But unfortunately, I haven’t gotten any information to download the free three drive indicator. Maybe if you are interested in finding information about this free three drive pattern indicator.
I can only advise you to ask fellow traders in the Forexfactory forum. If there are members who are kind and have this indicator then maybe they want to share with you.
But if you have a large capital, I have got information for these three drive pattern indicator at a price of 30 $. Maybe for those of you who have a large capital, this price is quite cheap for you to buy.
But for retail traders who are still in the learning stage, you might still think twice before buying this indicator. If you are interested in buying this indicator, you can visit this page.
Backtest three drive pattern
Maybe among forex traders who are still beginners will wonder, whether using a trading system to find this three-drive pattern will have a high success rate?
What you need to know before you decide to use these three drive trading methods, do the backtest by applying to a demo account, then this will provide lessons and more experience.
Where you can apply this trading system without risk, with experience even though only using this demo account will provide experience in a variety of market conditions.
Studying the three-drive pattern is part of one of the harmonic patterns that forex traders use to identify markets in making trade decisions.
If you use this method then you should be able to discipline in applying the trading system in accordance with the requirements mentioned in this article.
Besides that, the most important thing is applying money management and risk management. It will be in vain when you find a three-drive pattern but your trading method tends to take a high risk, traders must remember that price movements are often dynamic. To learn more about Three drive, there is so many source education like as 3 drives pattern Tradingview.
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