The Unique Three River Bottom Candlestick Pattern | Examples, Trading & Strategy

The Unique Three River Bottom is a bullish reversal candlestick pattern that appears after a downtrend, and consists of three candles.

The first candle is a long bearish candle indicating strong selling pressure, the second candle is a smaller bearish candle with a lower shadow extending below the first candle’s low, suggesting a potential loss of momentum among sellers, while the third candle will be a small bullish candle that closes above the second candle’s close, indicating a possible shift in market sentiment.

Understanding this pattern involves recognizing its structure－a long bearish candle, followed by a smaller bearish candle with a lower shadow, and culminating in a small bullish candle. This formation suggests a weakening of selling pressure and the emergence of buying interest.

To trade the Unique Three River Bottom, first confirm that it appears after a clear downtrend, ideally near a key support level or in oversold territory. Once the third candle closes — typically a small bullish candle following two bearish ones — consider entering a long position if the next candle breaks above its high. This confirms buyer interest and a possible reversal. 

Place your stop-loss below the lowest point of the pattern (usually the second candle), and set a take-profit at the next resistance zone or based on a 2:1 or 3:1 risk-reward ratio. For added confidence, combine the pattern with indicators like RSI, MACD, or a spike in volume.

In our experience, while the Unique Three River Bottom pattern is infrequent, its appearance can provide valuable trading opportunities when combined with other technical indicators (and sound risk management strategies).

How is the Unique Three River Bottom Pattern Formed?

This pattern forms over three consecutive trading sessions during a downtrend:

• First candle: A long bearish candle continues the existing downtrend.
• Second candle: A smaller bearish candle with a lower shadow that dips below the first candle’s low, indicating potential exhaustion among sellers.
• Third candle: A small bullish candle that closes above the second candle’s close, suggesting a possible reversal.

Is the Unique Three River Bottom Pattern Bullish or Bearish?

The Unique Three River Bottom pattern is considered a bullish reversal pattern. It indicates a potential shift from a downtrend to an uptrend, signaling that buyers may be gaining control.

What does the Unique Three River Bottom Candlestick Pattern Mean?

The Unique Three River Bottom pattern captures a slow and tentative shift in market sentiment. It forms after an extended decline, and each of its three candles tells part of the reversal story:

• First candle – a long bearish candle: This candle reinforces the prevailing downtrend. It closes near the low, showing strong bearish conviction and ongoing selling pressure.
• Second candle – a smaller bearish candle with a long lower shadow: Though still bearish, this candle is smaller in body size, and the long lower wick suggests that while sellers pushed prices to new lows, buyers are beginning to test demand. This is often the first sign of selling fatigue.
• Third candle – a small bullish candle: This candle opens within or slightly above the second candle’s close and closes above it, representing the first clear attempt by buyers to regain control. It doesn’t need to be a large candle — its presence alone marks a shift in sentiment.

This pattern reflects a sequence of strong bearish momentum → weakening pressure → tentative bullish engagement. The pattern suggests the downtrend is losing steam, and while buyers are not yet dominant, they are beginning to enter the market.

Where does the Name of the Unique Three River Bottom Pattern come from?

The name “Unique Three River Bottom” derives from the visual resemblance of the pattern to a river’s bottom, with the three candles representing the flow and eventual change in direction of market sentiment.

An Example of the Unique Three River Bottom Pattern

Let’s examine the EUR/USD pair during a sustained downtrend:

• First candle: A long red candle opens at 1.1080 and closes at 1.1000, confirming strong bearish momentum.
• Second candle: A smaller red candle opens at 1.0990, dips to 1.0950, and closes at 1.0980. The lower shadow signals buying interest.
• Third candle: A small green candle opens at 1.0985 and closes at 1.1010, closing above the second candle’s close.

A correct interpretation of the pattern suggests that:

• Sellers are aggressive at first.
• Then, they begin to lose steam, and buyers step in near the lows.
• The small bullish close on the third candle marks a possible reversal point.

This example shows how subtle shifts in market structure can point to a change in direction, and the sequence suggests a potential bullish reversal, with buyers starting to gain control.

How to Identify the Unique Three River Bottom Pattern?

To identify this pattern:

• Trend analysis: Ensure the market is in a downtrend.
• First candle: Look for a long bearish candle.
• Second candle: Identify a smaller bearish candle with a lower shadow extending below the first candle’s low.
• Third candle: Find a small bullish candle that closes above the second candle’s close.

All three candles must appear consecutively, and the third candle must close above the second. The second candle should extend the low, but show signs of rejection.

How to Trade the Unique Three River Bottom Pattern?

Trading this pattern involves several steps:

1. Find the Right Setup for the Unique Three River Bottom Pattern

Identify the Unique Three Rivers pattern in a downtrend, preferably near a support level. The overall structure should look like a soft bottoming formation, with the second candle forming the “depth” and the third signaling lift-off. Avoid trading the pattern in sideways or choppy markets, as it relies on a meaningful prior trend.

The pattern is most reliable when it forms:

• After a strong or extended downtrend.
• Near key support zones or oversold price areas.
• In conjunction with other reversal indicators.

2. Wait for the Appearance of the Unique Three Rivers Candlestick Pattern

Confirm the formation of the three candles as described above (jumping the gun on the second candle is mindless and will as likely lead to failure as success).

3. Open your Trade

Enter a long position after the third candle closes, setting a stop-loss below the second candle’s low.

4. Wait for Confirmation

Use additional indicators like the RSI or MACD to confirm the reversal, supplementary analysis that corroborates the Unique Three Rivers pattern is crucial.

You essentially have two options on trading this pattern:

Option 1: Wait for confirmation (more conservative)

Wait for a bullish candle to break and close above the high of the third candle. This adds conviction, especially when paired with:

• The RSI moving above 50
• A MACD bullish crossover
• A break above recent swing resistance

The benefit of this approach is that it filters out weak signals, but the negatives include that your entry may come later, potentially reducing R:R

Option 2: Enter immediately after the pattern (more aggressive)

Enter a long trade at the open of the next candle, or place a buy stop slightly above the third candle’s high. Use a tight stop-loss below the second candle’s low.

Here you’ll gain a better entry price, with higher potential reward, but there is the higher risk without confirmation

Suggested entry plan:

• Entry: Break of third candle’s high (or next candle open).
• Stop-loss: Below the second candle’s low
• Take-profit: Prior resistance levels or a 2:1 reward-to-risk target

5. Choose your Take Profit

Set a target based on previous resistance levels or a risk-reward ratio, as well as on your more or less conservative strategy as outlined above.

Which Strategies can be Used for the Unique Three River Bottom Pattern?

Several strategies can enhance the effectiveness of this pattern:

• Volume-based Strategy: Look for decreasing volume during the first and second candles. A volume spike on the third candle supports the reversal
• Tip: Use OBV or volume bars to confirm bullish buying pressure
• Breakout Strategy: Enter on the break above the high of the third candle, while placing your stop below the second candle’s low
• Tip: This works best when the pattern forms near support and breaks above minor resistance
• Indicator-based Strategy: Combine with RSI divergence (lower price, higher RSI), and look for a MACD histogram reversal or bullish crossover. 
• Tip: Add confirmation when RSI > 30 and MACD crosses shortly after pattern
• Support/Resistance Strategy: Identify the pattern forming just above a major support zone, and combine your analysis with trendline support or a psychological level
• Tip: Look for confluence with fib levels or horizontal S/R
• News-based Strategy: If pattern forms ahead of a bullish catalyst (e.g. positive macro news), confidence in reversal increases
• Tip: Avoid trading right before volatile news events unless using wide stops

What is the Success Rate of the Unique Three River Bottom Pattern?

According to an analysis by PatternsWizard, the Unique Three River Bottom pattern confirms a bullish reversal approximately 61.3% of the time across various markets. When targeting a 2:1 reward-to-risk ratio, it achieves its profit target in about 40.2% of cases.

Additionally, the pattern tends to retest its entry price level in 95.2% of instances－these statistics are based on a study of 5,341 occurrences across 4,120 markets over 59 years.

On the other hand, research by Thomas Bulkowski indicates that the Unique Three River Bottom pattern acts as a bearish continuation in 60% of cases, rather than a bullish reversal. He also noted that the pattern was relatively rare, ranking 89th in frequency out of 103 candlestick patterns analyzed.

When combining our analysis with past studies, it’s true to say that the success rate of this pattern varies:

• Theoretical performance: Bullish reversal.
• Tested performance: In the study mentioned above, it acted as a bearish continuation 60% of the time, making for a very low viability rate.
• Study frequency rank: 89 out of 103 candlestick patterns.
• Overall performance rank given: 60 out of 103.

Factors influencing its success include market conditions, confirmation from other indicators, and the presence of strong support levels.

Is the Unique Three River Bottom Pattern Suitable for Beginners?

Yes, but with caution. Beginners should combine this pattern with other technical analysis tools and practice trading it on demo accounts before live trading, as it definitely needs substantial corroboration in order to be a strategy asset.

Advantages:

• Simplicity: The pattern’s structure is straightforward.
• Clear Signals: Provides distinct entry and exit points.

Challenges:

• Rarity: The pattern is uncommon, requiring patience.
• False Signals: Without confirmation, the pattern may lead to false positives.

What are the Pros and Cons of the Unique Three River Bottom Pattern?

What are the Advantages of the Unique Three River Bottom Pattern?

The pattern’s structured formation provides traders with clear entry and exit points, enhancing the accuracy of trades. Its reflection of market psychology offers insights into potential trend reversals, improving the hit rate when combined with other indicators.

What are the Disadvantages of the Unique Three River Bottom Pattern?

The pattern’s rarity makes it less useful for frequent trading. Its reliability increases only when combined with other indicators, and without confirmation, it can easily give false signals, leading to potential losses.

Can the Unique Three River Bottom Pattern have Failure Signals?

Yes, the pattern can fail, especially if not confirmed by other indicators. Indeed, in some cases, it may act as a bearish continuation rather than a reversal signal. You will need to diligently employ additional tools to validate the pattern’s signals when it appears.

Which Indicators can be Combined with the Unique Three River Bottom Pattern to Increase its Success?

To enhance the reliability of the Unique Three River Bottom pattern, seasoned traders often combine it with various technical indicators:

• Relative Strength Index (RSI): An RSI reading below 30 can indicate an oversold condition, supporting the potential for a bullish reversal when the pattern forms.
• Moving Averages (MA): The pattern’s formation near a significant moving average, such as the 50-day MA, can act as a support level, reinforcing the reversal signal.
• Volume analysis: An increase in trading volume during the formation of the third candle can validate the pattern’s significance, suggesting strong buying interest.
• MACD (Moving Average Convergence/Divergence): A bullish crossover in the MACD histogram following the pattern can serve as additional confirmation of a trend reversal.

By integrating these indicators, traders can improve the pattern’s success rate and make more informed trading decisions.

What are Similar Patterns to the Unique Three River Bottom Pattern?

Several candlestick patterns share similarities with the Unique Three River Bottom, often indicating potential bullish reversals:

Pattern Name	Description
Morning Star	A three-candle pattern signaling a bullish reversal after a downtrend.
Three Inside Up	A bullish reversal pattern consisting of a large down candle, followed by a smaller up candle, and then a larger up candle.
Bullish Harami	A two-candle pattern where a small bullish candle is contained within the prior bearish candle’s body.
Hammer	A single candle with a small body and long lower shadow, indicating potential reversal.
Inverted Hammer	Similar to the hammer but with a long upper shadow, suggesting a possible bullish reversal.

These patterns, like the Unique Three River Bottom, are utilized in technical analysis to identify potential trend reversals. Download our free Candlestick Patterns PDF to find more alternative formations.

What is the Opposite Pattern of the Unique Three River Bottom?

The opposite of the Unique Three River Bottom is the Three Black Crows pattern. This bearish reversal pattern consists of three consecutive long bearish candles, each closing lower than the previous, indicating strong selling pressure and the potential onset of a downtrend.

What is the Difference Between the Unique Three River Bottom Pattern and the Three Stars In The South Candlestick Pattern?

While both patterns are bullish reversal signals, they have distinct formations:

• Unique Three River Bottom: Comprises a long bearish candle, followed by a hammer with a new low, and a small bullish candle within the hammer’s range.
• Three Stars In The South: Features three consecutive small-bodied bearish candles, each with lower highs and lows, indicating diminishing bearish momentum.

The primary difference lies in their structure, and the specific market psychology they represent:

1. Unique Three River Bottom

This pattern unfolds in a downtrend and consists of three candles:

• A long bearish candle, indicating strong selling pressure.
• A hammer-like candle with a lower low, suggesting that while sellers pushed the price down, buyers stepped in to drive it back up.
• A small bullish candle within the range of the second, signaling a potential shift in momentum.

The psychology here reflects a market where sellers are initially in control, but their dominance is waning. The appearance of the hammer indicates that buyers are testing the waters, and the final small bullish candle suggests that buying interest is emerging, potentially leading to a reversal.

2. Three Stars In The South

This rare pattern also appears in a downtrend and comprises three consecutive small-bodied bearish candles, each with lower highs and lows:

• The first candle is a long bearish candle with a long lower shadow, showing strong selling.
• The second is a smaller bearish candle with a higher low, indicating reduced selling pressure.
• The third is a small bearish marubozu within the range of the second, suggesting indecision.

The market psychology here indicates that while sellers are still present, their influence is diminishing (each candle’s reduced size and range reflect a loss of momentum among bears, hinting that a bullish reversal may be on the horizon).

Aspect	Unique Three River Bottom	Three Stars in the South
Trend Context	Appears after a downtrend	Appears after a downtrend
Candle Sequence	Long bearish → Hammer with new low → Small bullish candle	Long bearish → Smaller bearish → Smallest bearish (marubozu)
Market Psychology	Sellers losing control, buyers beginning to emerge	Diminishing bearish momentum, potential for bullish reversal
Signal Strength	Moderate, requires confirmation	Stronger, indicates clear weakening of bears
Rarity	Rare	Extremely rare

Understanding these patterns’ underlying psychology can help you refine your trading decisions. While both signal potential bullish reversals, the Three Stars in the South pattern often provides a clearer indication of weakening bearish momentum, whereas the Unique Three River Bottom suggests a more tentative shift in market sentiment.

What are the Limitations of the Unique Three River Bottom Pattern?

Despite its potential, the Unique Three River Bottom pattern has several limitations:

• Rarity: The pattern is uncommon, making it less frequently observable in markets.
• Ambiguity: Without confirmation from subsequent price action or indicators, the pattern may not reliably predict reversals.
• Lack of profit targets: The pattern does not inherently provide clear profit-taking levels, requiring traders to use additional tools for exit strategies.
• Dependence on context: Its effectiveness can vary based on market conditions and should be considered alongside broader technical analysis.

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Conclusion: Navigating the Unique Three River Bottom Pattern

The Unique Three River Bottom candlestick pattern is a rare but insightful formation that can signal potential bullish reversals in downtrending markets. Its structure—comprising a long bearish candle, followed by a hammer with a new low, and concluding with a small bullish candle—reflects a shift in market sentiment from bearish to bullish.

However, due to its rarity and the potential for false signals, it’s crucial to approach this pattern with a comprehensive strategy. Incorporating technical indicators such as the RSI, moving averages, and volume analysis can enhance the pattern’s reliability.

Moreover, understanding the market context and employing sound risk management practices are essential to limit your losses. While the Unique Three River Bottom pattern can offer valuable insights, it should not be used in isolation, and combining it with other analytical tools and strategies will provide a more robust trading approach.

From our experience, traders who dedicate time to studying such patterns and trading in demo before integrating them into a broader trading plan are better positioned to capitalize on the market opportunities they represent.