Smart Money Setup 04 [TradingFinder] Three Drive (Harmonic) + OB

2 kwi

🔵Introduction

The "Three Drive" pattern is a well-known formation in technical analysis, recognized for its ability to signal potential trend reversals in price action. Within the realm of trading, particularly in the context of "Reversal Patterns," the Three Drive pattern holds significance as a reliable indicator of shifts in market sentiment.

🟣Bullish 3 Drive

This pattern typically manifests at a price bottom, where a sequence of lower lows suggests a prevailing negative trend. However, within the structure of the Three Drive pattern, a notable occurrence unfolds.

The second low breaches the range of the first low, followed by the third low surpassing the range of the second low. These penetrations signify a diminishing selling pressure and an emerging buying interest.

Traders often await the confirmation of the third low surpassing the second low as an entry point, with price targets set at the highs formed within the Three Drive pattern.



🟣Bearish 3 Drive

Conversely, the Bearish Three Drive pattern emerges at a price top, characterized by a sequence of higher highs indicating an upward trend. Yet, amidst this apparent bullish momentum, a shift occurs.

The second high breaks beyond the range of the first high, succeeded by the third high exceeding the range of the second high. These breaches signify a waning buying strength and a resurgence in selling pressure.

Entry into a trade is often executed after the confirmation of the third high surpassing the second high, with targets set at the lows formed within the Three Drive pattern.



Importance:
Understanding the Three Drive pattern's significance extends beyond mere technical analysis. It bears resemblance to other established patterns, such as the Harmonic Pattern and Ending Diagonal within the Elliott Wave Theory.

Recognizing these parallels aids traders in comprehending broader market dynamics and potential price movements.

🔵Formation of 3 Drive in Order Block Zone

The convergence of the Three Drive pattern with the concept of the Order Block Zone introduces a nuanced layer to traders' analytical approach.

In "Price Action" methodology, Order Blocks represent areas on the price chart where significant market players, such as institutional traders, have executed notable orders.

These zones often act as barriers, with price encountering resistance or support upon reaching them.

When the Three Drive pattern forms within an Order Block Zone, it signifies a confluence of market dynamics.

The completion of the pattern within this zone suggests a potential reversal in the prevailing trend, augmented by the presence of significant institutional orders.

Traders incorporate these Order Blocks into their analysis to identify probable levels where price may change direction, enhancing the reliability of their trading decisions.

🔵How to Use:

To effectively utilize the Three Drive pattern within the Order Block Zone, traders seek alignment between the completion of the pattern and the presence of significant Order Blocks.

This convergence enhances the reliability of the pattern's signals, increasing the likelihood of successful trade outcomes.

Bullish Three Drive in Demand Zone:



Bearish Three Drive in Supply Zone:



Settings:

You can set your desired "Pivot Period" via settings for the indicator to identify setups based on it.