Three-line strike: the four-candle pattern and its sign trap

The three-line strike is a four-candle pattern built from a short, orderly run and one violent candle that wipes it out. Three candles of the same color march in one direction, each closing beyond the last. Then a fourth candle of the opposite color opens beyond the third close and travels all the way back past the open of the first. In a single session the market gives back three sessions of progress.

What that erasure means is where the sources disagree. The traditional reading treats the strike as a pause that clears out late traders before the original run resumes, so the pattern is named after the direction of the first three candles. Thomas Bulkowski, who tested candlestick patterns on large samples of US stocks, reported that in practice the fourth candle often wins and the pattern behaves more like a reversal.

This page sets out the exact shape, explains how Finabase's detector labels the two versions (the label is the opposite of what many readers expect), walks through two real strikes, and shows what all 20 strikes in our two-year test did next.

Anatomy of a three-line strike

The bullish version has four parts:

1. Three white candles with progressively higher closes. Each one opens inside, or very close to, the body of the candle before it. It looks like a small version of three white soldiers.
2. A fourth, black candle that opens above the third candle's close.
3. That fourth candle closes below the open of the first white candle. Its body covers the whole three-candle run.
4. Context: an advance that was already under way, so the three white candles extend an existing trend.

The bearish version mirrors it.

Here three black candles step lower, and a white candle opens below the third close and rallies to finish above the first black candle's open.

The exact rules Finabase uses

Finabase marks this pattern with TA-Lib's CDL3LINESTRIKE, run on daily bars. The test is short:

Three details matter.

The sign follows the first three candles. The TA-Lib source returns the third candle's color multiplied by 100. It is labeling the pattern the way the traditional continuation reading does: three white candles plus a strike is a bullish pattern because the trend it belongs to is up. If you think of the long black fourth candle as the signal, every Finabase label on this pattern will look backwards to you.

There is no trend test. The TA-Lib comment says outright that the pattern matters when it appears in a trend running the same way as the first three candles, and that the function does not check for one. In our sample, 8 of the 17 bullish detections formed after the stock had fallen over the prior ten sessions, so roughly half of them lacked the textbook setting.

The candles do not have to be long. Nothing in the code measures body size. Three small white candles followed by a modest black one qualify, as long as the open and close relationships hold.

What the strike says about the market

Picture the bullish version inside a steady advance. Buyers win three sessions in a row, and each session opens where the last one traded, so there is no sign of stress. Then the fourth session opens higher still, which pulls in the last wave of eager buyers, and from that open sellers take over for the entire day. By the close, everyone who bought during the three-day run is under water.

The continuation camp argues that this flush is healthy. Weak holders have been shaken out in one sharp move, the trend has room again, and the next leg starts from a lower, cleaner base. The reversal camp sees a market that could not hold three days of gains for even one session, which says demand was thinner than it looked.

Both stories fit the same four candles. That is why the context around the strike, and what the following sessions do, matter more than the pattern itself.

How traders confirm it

Because the two readings point in opposite directions, confirmation here means deciding which side the market takes next:

• For the continuation reading, look for price to recover the strike candle's open (the top of its body, for a bullish strike) within a few sessions. That shows the flush was absorbed.
• For the reversal reading, look for a close beyond the strike candle's extreme, for example below its low in the bullish case. That shows the selling is continuing.
• Check the larger trend. A strike against the direction of a 50-day moving average or a long-term trend line deserves more suspicion than one with it.
• Volume on the strike candle that is heavy relative to the three candles before it marks the fourth session as a real change of hands rather than a quiet drift.

In our study no detection met the simple "next close beyond the strike bar's extreme in the labeled direction" test. For a bullish strike that would require a close above the high of a long black candle the very next day, which almost never happens.

Two real strikes

Home Depot, July 30, 2025. HD had risen about 4% over the prior ten sessions. Three white candles from July 25 to July 29 closed at $375.34, $377.23 and $377.34. On July 30 the stock opened at $377.68, above that last close, and fell to $372.08, below the $374.66 open of the first white candle. TA-Lib scored it +100. The next session dipped again to $367.51, but the stock then climbed for two weeks and was 9.4% above the strike close ten sessions later. This is the continuation reading working as the textbook describes, including a nervous day before it did.

IBM, October 8, 2026. Three black candles from October 5 to October 7 eased from $221.58 to $220.51. On October 8 IBM opened at $220.15, below the prior close, and rallied to $226.61, above the $222.30 open of the first black candle. TA-Lib scored it −100, the bearish continuation label. The opposite happened: IBM was 3.3% higher five sessions later and 11.3% higher after ten. Here the white strike acted the way Bulkowski describes, as the first candle of a reversal.

A third case shows how messy the label can get. Oracle printed a +100 strike on November 20, 2025, after falling 13.6% in ten sessions: three white candles, then a black candle from $231.16 down to $210.69. The stock fell another 4.1% over the next five sessions, then recovered and was 3.3% above the strike close after ten.

What the data says

We ran CDL3LINESTRIKE over two years of daily bars (October 30, 2024 to October 29, 2026) for 60 widely held US stocks and ETFs. It fired 20 times on 15 of them.

Read the bullish row both ways. If the label is right, 52.9% of strikes should have risen, and they did, which is the same as a random day. If the reversal reading is right, the black fourth candle should have led to declines, and only 47.1% did. Neither interpretation beat a coin weighted by the market's own drift.

The bearish row has three cases. Two of the three rose over the next five sessions, which is what the reversal reading predicts, but three cases cannot support any conclusion.

Look-alike patterns

The strike's distinguishing feature is scale: one candle's body is larger than three candles' worth of progress combined.

An educational outline for trading it

This outline shows how a practitioner might handle the pattern. It is not a recommendation to trade.

1. Decide which reading you are testing before the pattern appears, and write it down. Switching interpretations after the fact makes every strike look right.
2. Require the textbook setting for the continuation reading: the three candles must extend an existing trend, not start one.
3. Wait one or two sessions. Under the continuation reading, a recovery of the strike candle's open is the trigger. Under the reversal reading, a close beyond the strike candle's far extreme is the trigger.
4. Place risk at the other end of the strike candle. Its body is long, so the stop is wide, and position size has to shrink to match.

How Finabase shows the three-line strike

• Chart markers. Add the Three Line Strike study to any chart and Finabase marks the fourth candle of every strike TA-Lib finds on the daily bars.
• Scanner. The candlestick scanner sorts detections by the sign of TA-Lib's output, so a +100 strike appears on the bullish list and a −100 strike on the bearish list. Expect the bullish list to show a stock whose latest candle is a long black one: that is the pattern's labeling, not a scanner error.
• Signals tab. On a symbol page such as AAPL's signals, each of the 61 patterns casts one vote in the Candlestick gauge: the most recent non-zero reading in the last eight bars counts as Buy (positive) or Sell (negative), and no reading counts as Neutral. A bullish strike within that window adds a Buy vote. The gauge combines the votes as (buy − sell) / (buy + sell + min(neutral, max(buy, sell))) and reads Strong Sell below −0.6, Sell to −0.2, Neutral to 0.2, Buy to 0.6 and Strong Buy above that.

Frequently asked questions

Is the three-line strike bullish or bearish?

It depends on which reading you follow. By the traditional definition, which TA-Lib uses, three white candles plus a black strike is bullish, because the strike is seen as a pause in an uptrend. Bulkowski found that in practice the fourth candle's direction often prevails, which would make the same shape bearish.

Why does Finabase list a long black candle as bullish?

Because TA-Lib assigns the score from the first three candles, and Finabase's scanner and gauge sort by that score's sign. The black candle is the strike; the bullish label describes the trend it interrupted.

How common is the pattern?

Rare. It appeared 20 times in about 30,000 daily bars of large US stocks and ETFs, or roughly once per stock every six years on average.

Does the strike have to be one long candle?

Yes. Its open must be beyond the third candle's close and its close beyond the first candle's open, so its body always spans the entire run.

Summary

The three-line strike records a short, tidy run that one session erases completely. Tradition reads it as a continuation and TA-Lib labels it that way, which is why Finabase's bullish strikes end in a long black candle. Bulkowski's research leans toward the reversal reading. Our sample of 20 strikes on large US names backed neither view: the bullish cases rose about as often as any day did. Use the pattern as a flag that the recent run is gone, decide in advance which reading you are testing, and let the next sessions settle it.