Latest posts

    Ethereum – Secret bear flag! (70% crash target)

    March 31, 2023

    Bitcoin is retesting a trendline from 2013! (right now)

    March 29, 2023

    Bitcoin – No one talks about this trendline, last wave up!

    March 27, 2023
    Telegram RSS
    • My TradingView
    • Best way to trade futures
    • Best way to trade spot
    • The holy grail of trading
    • The game changer
    Telegram RSS
    Tolberti
    • Home
    • Education
      1. Motivation & Strategy
      2. Technical Basics
      3. Candlesticks
      4. Chart patterns
      5. Indicators
      6. FIbonacci
      7. Elliott wave
      8. Harmonic patterns
      9. View All

      What is drawdown in Trading

      December 2, 2022

      Trading Psychology and its Importance – Tips For a Winning Mindset

      November 2, 2022

      As a trader you need to stay disciplined!

      November 2, 2022

      How to Create a Successful Trading Plan – Step-By-Step Guide

      November 2, 2022

      Price action trading strategies that you need to know

      November 2, 2022

      Support and Resistance – A basic concept of technical analysis

      November 2, 2022

      Technical analysis explained – What is it and how does it work?

      November 2, 2022

      The most common mistakes technical analysts make

      November 2, 2022

      Candlestick Patterns – Complete Guide to Bearish and Bullish Candlesticks

      November 2, 2022

      Rising three methods

      August 11, 2022

      Falling three methods

      August 11, 2022

      Spinning top

      August 11, 2022

      Rising & Falling Wedge

      January 20, 2023

      Bullish Pennant

      January 20, 2023

      Bull Flag

      January 20, 2023

      Head and Shoulders

      January 20, 2023

      OBV – On-Balance Volume

      December 2, 2022

      Market Profile – A Complete Guide

      November 2, 2022

      Ichimoku cloud

      August 18, 2022

      Moving average (MA)

      August 18, 2022

      Fibonacci and Market Analysis

      August 13, 2022

      4 mistakes that Traders should avoid while Trading with Fibonacci

      August 13, 2022

      Why Fibonacci Series is important for Technical Analysis

      August 13, 2022

      A complete overview on trend and theory of retracement

      August 13, 2022

      Elliott Wave Cheat Sheet: All You Need

      August 14, 2022

      Elliott Wave Theory: Complex guide

      August 14, 2022

      Elliott Wave: All About How To Count

      August 14, 2022

      Leading And Ending Diagonal: How To Trade Them

      August 14, 2022

      Alternate bat pattern

      October 1, 2022

      The List of All Known Harmonic Patterns & Ratios

      October 1, 2022

      Cypher pattern

      September 1, 2022

      ABCD pattern

      August 13, 2022

      Rising & Falling Wedge

      January 20, 2023

      Bullish Pennant

      January 20, 2023

      Bull Flag

      January 20, 2023

      Head and Shoulders

      January 20, 2023
    • Technical analysis

      Ethereum – Secret bear flag! (70% crash target)

      March 31, 2023

      Bitcoin is retesting a trendline from 2013! (right now)

      March 29, 2023

      Bitcoin – No one talks about this trendline, last wave up!

      March 27, 2023

      Shiba Inu – 23% crash, best opportunity! (long-term outlook)

      March 25, 2023

      Bitcoin – The bottom is not in! 15k or 10k (careful)

      March 23, 2023
    • Info
      • Crypto news
      • Crypto converter
      • Crypto exchanges
      • My TradingView
      • Best way to trade futures
      • Best way to trade spot
    • Contact
    • My books
    • Join premium channel
    Tolberti
    Home»Education»Harmonic patterns»Three drives pattern
    Harmonic patterns

    Three drives pattern

    By TolbertiAugust 13, 2022No Comments
    Facebook Twitter Telegram WhatsApp Reddit Pinterest Email
    Share
    Facebook Twitter Telegram WhatsApp Reddit Pinterest Email

    The three drive chart pattern is a formation of three consecutive symmetrical price movements. It is classified as a harmonic reversal pattern and comes in two forms: bullish and bearish.

    Currency traders use the three drives to identify potential reversal zones in the live forex market. Upon doing so, it becomes possible to enter the market to the long (buy) or short (sell).

    How To Identify And Use The Three Drives Reversal Pattern In Forex Trading

    Like other harmonic patterns, identifying and constructing the three drives pattern is a multi-step process. Nonetheless, it’s a powerful reversal indicator and one that can improve your profitability when trading forex. The GBP/USD chart below gives us a clear illustration of the three drives pattern.

    Below is a breakdown of the process used to identify and trade this harmonic pattern:

    1. Identify the prevailing bullish or bearish trend.
    2. Label the three consecutive directional price movements as 1, 2, and 3.
    3. Confirm the pattern by using Fibonacci extensions or retracements. This is done in the same fashion as the ABCD pattern only with an added leg.
    4. Upon the third drive being completed, establish a market entry. This will exist as either a bullish or bearish reversal.

    Previously Formed Swing Point

    One of the critical parts of constructing a valid three drives is identifying a previously formed swing point. A swing point is where price pivots from the existing trend.

    Swing points are vital elements of the three drives pattern. They serve as the price point from which Fibonacci extensions and retracements are applied. Below is an illustration of a swing point.

    Fibonacci Extensions & Retracements

    When identifying the three drives pattern, symmetry of price action is important. To establish this symmetry, Fibonacci extensions or retracements may be used. The following are how each may be applied to build the three drives formation:

    • Fibonacci Extensions: The last two drives, C-D and E-F, should represent 127.2% and 161.8% of the B-C and D-E pullbacks.
    • Fibonacci Retracements: The B-C and D-E pullbacks represent 61.8% or 78.6% retracements of the preceding drive.

    The Bearish Vs. Bullish Three Drives Pattern

    Like many other indicators and candlestick patterns, the three drives pattern may be interpreted in numerous ways. Once spotted on a price chart, it’s the trader’s responsibility to view the formation in the proper context.

    The three drives pattern may develop into bullish or bearish trends. Also, it’s essential to understand that it is a leading technical indicator.

    The pattern is a reversal indicator that aims to project a future change in market direction. Accordingly, three drives patterns signal to buy or sell against an established trend.

    How To Trade Forex Using The Three Drives Formation

    All classical, harmonic, and single-candlestick patterns have a specific procedure for being traded. It is a three-pronged approach that includes determining market entry, setting a stop loss, and locating a profit target.

    1. Market Entry

    The three drives formation is a reversal indicator that occurs in both uptrends and downtrends. Thus, the pattern may act as either a bullish reversal (buy) or bearish reversal (sell) signal.

    Market entry for the three drives occurs after the third drive. The bullish three drive pattern is a buy above the third drive; for the bearish, it’s a sell beneath the third drive.

    2. Stop-loss

    Locating a stop loss with harmonic chart patterns relies on building out the proper legs of the formation. For instance, in the case of the bearish three drives, the progression is an upward move then a lower retracement. So, the stop loss is located above the formation.

    In the case of a bullish three drives pattern, the stop loss is placed beneath the lower extreme established by the third drive.

    3. Profit Targets

    Forex traders use a collection of techniques to set their profit targets. A few of the most common are risk vs. reward ratios, pattern height, or Fibonacci extensions.

    With the three drives formation, it’s up to you where you place your profit targets. Factors to consider include market volatility, strategy, and the time frame being traded.

    Example

    The GBP/USD chart below provides a clear look at how to determine market entry, set stop losses, and align profit targets.

    Here’s how the GBP/USD trade above was executed:

    1. A pronounced downtrend was observed on a 1-minute GBP/USD chart.
    2. The three drives pattern was constructed.
    3. A buy order at 1.3178 was executed.
    4. Stop-loss was placed beneath the pattern at 1.3175.
    5. A profit target was located at 1.3189 at the pattern’s 62% retracement.
    6. An 11 pip gain was realized upon price reaching the profit target.

    Three Drives Harmonic Patterns – Pros and Cons

    Every strategy, system, or analytical base has a set of pros and cons. Below are a few of the most relevant for the three drives chart pattern.

    Pros

    • User-friendly and easy to recognize
    • Can generate large profits when effective
    • Offers the trader a concrete stop out point

    Cons

    • It doesn’t frequently occur in all forex pairs
    • It is expensive to trade on more extensive duration price charts
    • Loses efficacy on compressed time frames

    Key Takeaways

    Below, we have summarized the main findings of three drives harmonic patterns:

    Key Points to Take Away
    1. The three drives formation is a harmonic chart pattern. It consists of three consecutive moves in price, which each follow a measured retracement.
    2. Three drives patterns are leading reversal indicators. They furnish traders with counter-trend buy and sell signals. The bullish three drives occur during a downtrend; a bearish three drives develop during an uptrend.
    3. Fibonacci retracements and extensions are used to confirm the pattern’s symmetrical price movements.

    FAQs

    Below are a few of the most frequently asked questions regarding the three drives harmonic chart pattern.

    Are three drives patterns reliable reversal indicators?

    Yes. However, the prevailing trend is likely to extend significantly when they fail. Be sure to utilize proper risk management tools when trading the three drives.

    Must the price retracements of the three drives be precisely 61.8% or 78.6%?

    No. The Fibonacci retracement numbers are guidelines used to quantify price symmetry. While the pullbacks don’t have to be exact, they need to be in the immediate vicinity of these levels.

    Which is better: the bullish or bearish three drives?

    Either pattern functions well as a reversal indicator; one is not inherently better than the other.

     

    Share. Facebook Twitter Telegram WhatsApp Reddit Pinterest Email
    Previous ArticleWolfe waves pattern
    Next Article Shark pattern
    Tolberti
    • Website

    Professional trader and analyst. My specialization is in Elliott Wave Theory, Fibonacci tools, chart patterns, candlesticks, and price action. To analyze market structure, I use market profile and volume profile in my trading system. To analyze trends, I use trendlines, VWAP, and simple moving averages.

    Join premium channel
    Join Premium
    Random education
    Candlesticks

    Three white soldiers

    TolbertiBy TolbertiAugust 11, 20220

    The three white soldiers pattern occurs over three days. It consists of consecutive long green…

    Motivation & Strategy

    The Wyckoff Method – Trading Based on Richard Wyckoff’s Theories

    TolbertiBy TolbertiNovember 2, 20220

    The Wyckoff Theory revolves around the accumulation/distribution and supply/demand for a particular investment. This trading method…

    Harmonic patterns

    The List of All Known Harmonic Patterns & Ratios

    TolbertiBy TolbertiOctober 1, 20220

    This is the List of All Known Harmonic Patterns & Ratios. If you want to…

    Candlesticks

    Rising three methods

    TolbertiBy TolbertiAugust 11, 20220

    The opposite is true for the bullish pattern, called the ‘rising three methods’ candlestick pattern.…

    Indicators

    CCI – Commodity channel index

    TolbertiBy TolbertiAugust 17, 20220

    COMMODITY CHANNEL INDEX DEFINITION The commodity channel index (CCI) is an oscillator used to identify…

    Random analysis
    Technical analysis

    SUSHI – Double breakout! An extreme uptrend is coming!

    TolbertiBy TolbertiOctober 18, 20220

    Great news for the SUSHI altcoin, because a descending parallel channel and a symmetrical triangle are currently breaking out…

    Technical analysis

    DXY will trigger a huge crash! Best to stay in cash.

    TolbertiBy TolbertiDecember 14, 20220

    Everything indicates that the recession in 2023 is pretty much inevitable. And when the Fed pivots ,…

    Technical analysis

    Fantom FTM – Time for the bullish action! Elliott Wave + 200 MA

    TolbertiBy TolbertiJuly 23, 20220

    On the daily chart we have an impulse Elliott Wave that has been completed and because of that, I…

    Technical analysis

    Bitcoin – You haven’t seen this before! (secret)

    TolbertiBy TolbertiOctober 10, 20220

    You haven’t seen this inverse head and shoulders pattern before! The price of bitcoin is going sideways, so I…

    Technical analysis

    0% Inflation very soon?

    TolbertiBy TolbertiOctober 24, 20220

    United States Inflation Rate, Year-over-Year, 1914-2022 chart —————————————————————- Why do I think inflation will go down to 0%? Inflation is…

    Free technical analysis and education from a professional trader. Go to the "education" section and start learning immediately.

    💡Join my premium channel on Telegram (my trades, signals) - get access.

    ✅ 1 month: 49 USD
    ✅ 4 months: 99 USD
    ✅ 12 months: 149 USD
    ✅ Life Time: 249 USD

    Latest posts

    Ethereum – Secret bear flag! (70% crash target)

    March 31, 2023

    Bitcoin is retesting a trendline from 2013! (right now)

    March 29, 2023

    Bitcoin – No one talks about this trendline, last wave up!

    March 27, 2023
    Get Informed

    Subscribe to Updates

    Get the latest news about crypto, technical analysis and trading.

    Telegram RSS
    • Home
    • Education
    • Technical analysis
    • Info
    • Contact
    • Terms of use
    • My book
    • Join premium channel
    © 2023 Tolberti.com. All rights reserved.

    Type above and press Enter to search. Press Esc to cancel.

    This website uses cookies to give you the most relevant experience.
    Cookie SettingsAccept
    Manage consent

    Privacy Overview

    This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
    Necessary
    Always Enabled
    Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
    CookieDurationDescription
    cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
    cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
    cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
    cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
    cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
    viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
    Functional
    Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
    Performance
    Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
    Analytics
    Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
    Advertisement
    Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
    Others
    Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
    SAVE & ACCEPT