CandleFocus Glossary Editor
The Unique Three River Pattern (UTR) is an important technical analysis formation in Forex trading, typically indicating an expectancy for a strong bullish reversal in a downtrend. As the name implies, the pattern is composed of three candles in a specific order - a long downward real body, followed by a hammer which makes a new low, followed by a third candle with a very small upward real body which stays within the range of the hammer.
Traditionally, the Unique Three River Pattern is viewed as a bullish reversal signal. This means that a trader who identifies the formation may expect the price to reverse the trend and move higher. In the case of the formation completing, a confirmation candle is needed in order to validate the direction of the anticipated price action - either higher or lower.
The Unique Three River Pattern is most useful in Forex trading and is considered an important tool to analyse a period of sell-off. It is important to note that the pattern will only work as an indicator of bullishness if the movements of the two following candles validate the signal given by the formation. An example of a validating bullish confirmation candle would be a small red real body closing above the hammer's low point.
In order to identify the Unique Three River Pattern, traders need to closely watch for the following points:
1. The first candle in the pattern must be a long black real body which closes lower than its opening price.
2. The second candle should be a hammer, typically closing significantly above its opening and making a new low.
3. The third candle should be a small white real body with an open point matching the close of the hammer candle, and a closing price within the range of the hammer's real body, but higher than the open point.
When the Unique Three River Pattern is identified, traders should observe the next candle closely as it will provide a confirmation of the direction of the anticipated price action - higher or lower.
Although the Unique Three River Pattern is typically viewed as a bullish pattern, it is important to be aware that it does not guarantee a bullish outcome and the price can move in either direction following the formation. Therefore, a trader should approach the pattern with caution and not rely on the signal provided.
Traditionally, the Unique Three River Pattern is viewed as a bullish reversal signal. This means that a trader who identifies the formation may expect the price to reverse the trend and move higher. In the case of the formation completing, a confirmation candle is needed in order to validate the direction of the anticipated price action - either higher or lower.
The Unique Three River Pattern is most useful in Forex trading and is considered an important tool to analyse a period of sell-off. It is important to note that the pattern will only work as an indicator of bullishness if the movements of the two following candles validate the signal given by the formation. An example of a validating bullish confirmation candle would be a small red real body closing above the hammer's low point.
In order to identify the Unique Three River Pattern, traders need to closely watch for the following points:
1. The first candle in the pattern must be a long black real body which closes lower than its opening price.
2. The second candle should be a hammer, typically closing significantly above its opening and making a new low.
3. The third candle should be a small white real body with an open point matching the close of the hammer candle, and a closing price within the range of the hammer's real body, but higher than the open point.
When the Unique Three River Pattern is identified, traders should observe the next candle closely as it will provide a confirmation of the direction of the anticipated price action - higher or lower.
Although the Unique Three River Pattern is typically viewed as a bullish pattern, it is important to be aware that it does not guarantee a bullish outcome and the price can move in either direction following the formation. Therefore, a trader should approach the pattern with caution and not rely on the signal provided.