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Technical Analysis

The Bullish 3 Drive Pattern

What is the Bullish 3-Drive Pattern?

  • The Bullish 3-Drive Pattern (3-drives to a bottom)
  • The rare pattern where price and time symmetry is key
    • Should be easily identified, or “jump out” at you
  • Formed by 3 consecutive symmetrical valleys
    • Contains two connecting (intertwined) bullish ABCD patterns
    • Also contains bullish butterfly pattern (completing at 3rd drive)

Why is the Bullish 3-Drive Pattern important? include the U.S. Dollar (USD).

  • Suggests market potentially at its most bearish—higher probability for market reversal
  • Typically offers excellent risk/reward ratio
  • Pattern failure suggest potentially strong bearish continuation move may be in progress

So how do I find it?

First, it’s very important to remember not to “force” a 3-drive pattern. Price, as well as time symmetry, are key, so it’s something that should really stand out as three distinct, symmetrical drives to a bottom. Remember, the 3-drive is a far rarer pattern than a butterfly or Gartley (especially on longer timeframes), and it should be something that jumps out at you.

Bearish 3-Drive Pattern Rules (sell at 3rd drive)

  • Symmetry is the key to this pattern
  • Drives 2 and 3 should be 127.2% or 161.8% extensions of the A and C retracements
  • The A and C retracements will typically be 61.8% or 78.6% of the previous drive.
    • In strongly trending markets these retracements may be 38.2% or 50%.
  • The time of A and C retracements should be symmetrical. Same goes for extensions (2nd & 3rd drives to top)
  • A large price gap at any time may be a sign that the pattern is wrong. Traders should wait for further confirmation that a top is in progress.

Example 1 – (GBP/USD, 1hr) …taken around Feb 7-14th 2007

Example 2 – (GBP/USD, 1hr) …taken around Feb 7-14th 2007

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