Three Drives Harmonic Chart Pattern
The three drivers chart pattern is a well known harmonic chart pattern that acts as a trend reversal. The pattern consists of either three higher highs or lower lows which is an indication of a potential trend reversal.
There are two different types of three drives pattern:
Bullish Three Drives Pattern
There are three different waves in the pattern as the name suggests, three drives.
With the subsequent drives, there are lower lows that are being formulated in the pattern with three different bottoms.
Once the third wave is completed and the low point has been observed, a buy signal can be created with formulating the Fibonacci levels and generating the buy signal with a Fibonacci extension of 1.27 or 1.628.
For the stop-loss and take profit levels, you can formulate a new Fibonacci level with the start and end of the pattern and keep 161.8% as the stop-loss level and 61.8% as the take profit level.
The important point that confirms the drives is a similar time period between the uptrend after the 1st wave and 2nd wave also a similar time period between the 2nd wane and 3rd wave for the downtrend.
The bearish three drives pattern is completely opposite of the bullish three dives pattern and can be spotted in a similar manner.
The three drives pattern belongs to the family of harmonic patterns and thus makes use of not just chart patterns but also technical retracement levels to validate the pattern. A three-drive pattern that does not meet the retracement criteria can be discarded.
The pattern is therefore qualitative as well as quantitative in nature.
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There are two different types of three drives pattern:
- Bullish
- Bearish
Bullish Three Drives Pattern
There are three different waves in the pattern as the name suggests, three drives.
With the subsequent drives, there are lower lows that are being formulated in the pattern with three different bottoms.
Once the third wave is completed and the low point has been observed, a buy signal can be created with formulating the Fibonacci levels and generating the buy signal with a Fibonacci extension of 1.27 or 1.628.
For the stop-loss and take profit levels, you can formulate a new Fibonacci level with the start and end of the pattern and keep 161.8% as the stop-loss level and 61.8% as the take profit level.
The important point that confirms the drives is a similar time period between the uptrend after the 1st wave and 2nd wave also a similar time period between the 2nd wane and 3rd wave for the downtrend.
The bearish three drives pattern is completely opposite of the bullish three dives pattern and can be spotted in a similar manner.
The three drives pattern belongs to the family of harmonic patterns and thus makes use of not just chart patterns but also technical retracement levels to validate the pattern. A three-drive pattern that does not meet the retracement criteria can be discarded.
The pattern is therefore qualitative as well as quantitative in nature.
----------------------------------------------------------------------------------------
If you find the post useful, please like and share our ideas with the community!
- Mudrex
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