Three Drives Pattern

Three Drives pattern is a quite interesting pattern consisting of 2 consecutive AB=CDs. It gets its name for the 3 peaks marking the attempts of the exhausted market to continue trend. Because it signals trend reversal, it is good to find it in the end of a trend. There are 2 versions of the pattern bullish (looks like ladder up) and bearish (looks like ladder down). Below are the schematic pictures of the Bullish and Bearish Three Drives patterns:

Bullish Three Drives PatternBearish Three Drives Pattern
The pattern starts with uptrend or downtrend which comes to exhaustion and draws zigzag like final movements. The characteristics of the Three Drives pattern to look at:

  • Retracement from the first peak should be no more than 0.618 of the previous trend move
  • Second peak should be 1.272 extension of retracement 1A of the first peak.
  • Retracement from the second peak should be 0.618 of it
  • Third peak should be 1.272 extension of retracement 2B of the second peak.

Three Drives Pattern is one of the strongest reversal patterns, it is traded against the trend when the price is approaching point D. The stop is placed few ticks below/above the farthest possible D level. The safe target lies within A and B retracements. Many patterns can do much better than that, but the conservative targets must be used to lock in profit and possibly unloading part of the position. Entries might be done with a limit order or on price reversal away from D. All entries must be tested for risk/reward ratio. Entries with low risk/reward has to be taken cautiously or discarded altogether. Our fantastic indicator automatically scans for, recognizes, displays and alerts emerging Three Drives and other Harmonic Chart patterns. It shows the pattern name, when it happened and the stop price. The pattern scanner goes through multiple charts at the same time and helps you to find trading opportunities as soon as they arise.

  • Bullish Three Drives
    Bullish Three Drives
  • Bullish Three Drives
    Bullish Three Drives
  • Bullish Three Drives
    Bullish Three Drives
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