Pattern Detail

Three-Bar Reversal

A reversal bar after three bars of run, read as the turn. How much room that turn tends to offer.

A real Three-Bar Reversal on NQ daily bars, Nov 30, 2022. Price then followed through 0.1% over the next 5 bars. The bright candles are the pattern; the dimmed bars are surrounding context.
A real Three-Bar Reversal on NQ daily bars, Nov 30, 2022. Price then followed through 0.1% over the next 5 bars. The bright candles are the pattern; the dimmed bars are surrounding context.

Bullish Three-Bar Reversal

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How to read this

Everything here is in R, the setup's own risk. 1R is the distance from the entry (the pattern's closing price) to where it would be proven wrong — its lowest low over the 3 bars that form it. So "offered 2R" means price ran twice that distance in your favor at some point before the stop. It does not assume you took profit there: a target is a strategy choice.

Room offered (≥ 1R)

46.1%

Reliable

Offered at least 1× its risk before the stop, vs 42.6% for a random long entry (+3.5 pts).

Move size vs normal

1.08×

Realized range over the next 20 bars vs a random bar. About normal.

Typical room (20-bar)

1.19R

Average run in favor (capped at 3R), vs 1.10R for a random long entry.

Summary

Offered at least 1R of room 46.1% of the time vs 42.6% for a random long entry — a 3.5-point gap, wider than the ±0.7-point margin of error from chance, and it holds across the sample. A real, if modest, tendency to offer more room than the market alone.

Room offered, this setup vs a random long entry

Outcome This setup Random entry Edge
Offered ≥ 1R 46.1% 42.6% +3.5
Offered ≥ 2R 27.4% 27.0% +0.4
Offered ≥ 3R 16.9% 18.3% -1.4
Stopped < 1R 50.0% 53.6% -3.6
Went sideways 3.9% 3.8% +0.0

17,160 occurrences · 357,068 random-entry controls · 20-bar horizon

Bearish Three-Bar Reversal

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How to read this

Everything here is in R, the setup's own risk. 1R is the distance from the entry (the pattern's closing price) to where it would be proven wrong — its highest high over the 3 bars that form it. So "offered 2R" means price ran twice that distance in your favor at some point before the stop. It does not assume you took profit there: a target is a strategy choice.

Room offered (≥ 1R)

46.4%

Reliable

Offered at least 1× its risk before the stop, vs 40.9% for a random short entry (+5.5 pts).

Move size vs normal

1.03×

Realized range over the next 20 bars vs a random bar. About normal.

Typical room (20-bar)

1.21R

Average run in favor (capped at 3R), vs 1.07R for a random short entry.

Summary

Offered at least 1R of room 46.4% of the time vs 40.9% for a random short entry — a 5.5-point gap, wider than the ±0.7-point margin of error from chance, and it holds across the sample. A real, if modest, tendency to offer more room than the market alone.

Room offered, this setup vs a random short entry

Outcome This setup Random entry Edge
Offered ≥ 1R 46.4% 40.9% +5.5
Offered ≥ 2R 28.9% 26.8% +2.1
Offered ≥ 3R 19.2% 18.8% +0.4
Stopped < 1R 51.0% 56.5% -5.5
Went sideways 2.7% 2.7% -0.0

17,595 occurrences · 356,316 random-entry controls · 20-bar horizon

A three-bar reversal is a turn after a short run. Three bars push one way, then a bar reverses against them. After a run down, that reversal bar turns up, a bear-to-bull reversal you trade long. After a run up, the reversal bar turns down, a bull-to-bear reversal you trade short. The trade is the reversal side.

How to spot it

  • Three consecutive bars run in one direction, down for a bear-to-bull setup, up for a bull-to-bear setup.
  • The next bar reverses against that run.
  • A bear-to-bull reversal turns up after the run down, and you take the long.
  • A bull-to-bear reversal turns down after the run up, and you take the short.
  • The pattern is directional: the trade is always the reversal side, not the run that preceded it.

Why it matters

The idea behind the three-bar reversal is that a short directional run exhausts itself and the reversal bar marks the turn. The question is whether that turn is the start of a new move or just a single bar that pushed back before the run resumed. Traders who read it as a turn take the reversal side and trail it; those who read it as noise stand aside. The data below shows how much room the reversal direction actually offered.

Does it actually work?

A pattern is a setup, not a trade, so the question is not “did it win” but “how much room did the move offer before the reversal was proven wrong.” The tabs below answer that on the index futures (Nasdaq and S&P 500), across intraday timeframes (5m, 15m, 30m, 1h) and the daily chart.

For each reversal we measure the room price offered in the reversal direction, in units of the pattern’s own risk, then set it against a random entry on the same market and timeframe. When the reversal direction offers more room more often than chance, that shows up as a real edge. When it does not, the page says so plainly.

How we measured it

  • Entry is the close of the reversal bar.
  • One unit of risk, 1R, is the distance from that close to the reversal extreme: the low of a bear-to-bull reversal (a long), the high of a bull-to-bear reversal (a short). A move back through there says the reversal failed.
  • We follow the next 20 bars and record how far price ran in the reversal direction, in multiples of that risk, before the stop was hit.
  • Every figure is set against a random entry on the same market and timeframe, so the market’s own drift is accounted for.
  • No profit target and no position sizing. This measures only the room the pattern tends to offer.

What this page does not cover

  • Looser pattern variants, such as allowing an inside bar within the three, or counting a run by highs alone without the matching lows.
  • Conditioning on the sizes of the three preceding bars.
  • A profit target or position sizing. Where you take profit, and how much you put on, are strategy decisions this page leaves to you.

FAQ

What is a three-bar reversal pattern?

It is a bar that reverses against a short run. After three bars run down, a bar that turns up is a bear-to-bull reversal you trade long, and after three bars run up, a bar that turns down is a bull-to-bear reversal you trade short. This page enters on the close of that reversal bar and measures how much room price then offers in the reversal direction compared with a random entry.

Does a three-bar reversal actually mark a turn?

That is what the page measures. The folklore says three directional bars exhaust the move and the fourth marks the turn. Rather than a yes or no, the page shows how far price tends to run in the reversal direction relative to chance, in units of the pattern’s own risk. The two reversal directions are reported separately, since long and short setups can behave differently on equity index futures. A reading near the random baseline means the reversal told you little; a clear edge means the turn carried.

Sample Three-Bar Reversal Occurrences (20)

Based on data through Apr 30, 2026

Time Direction Risk (pts) Room offered Result
Apr 30, 2026 Bearish 66.75 0.57R Stopped
Apr 30, 2026 Bullish 76.75 1.23R Ran ≥1R
Apr 30, 2026 Bearish 37.5 0.02R Stopped
Apr 30, 2026 Bullish 52.75 0.00R Stopped
Apr 30, 2026 Bearish 28.5 2.06R Ran ≥1R
Apr 30, 2026 Bullish 65.75 2.71R Ran ≥1R
Apr 30, 2026 Bearish 196 0.67R Flat
Apr 30, 2026 Bullish 20.5 Open
Apr 30, 2026 Bullish 37.75 Open
Apr 30, 2026 Bearish 3.25 Open
Apr 30, 2026 Bullish 85.25 0.00R Stopped
Apr 30, 2026 Bullish 19.5 0.42R Stopped
Apr 29, 2026 Bullish 36.25 1.39R Ran ≥1R
Apr 29, 2026 Bearish 12.5 0.00R Stopped
Apr 29, 2026 Bullish 62.25 1.93R Ran ≥1R
Apr 29, 2026 Bearish 25.25 0.00R Stopped
Apr 29, 2026 Bearish 10 3.00R Ran ≥1R
Apr 29, 2026 Bearish 21.25 2.67R Ran ≥1R
Apr 29, 2026 Bearish 15.25 0.00R Stopped
Apr 29, 2026 Bullish 40.75 0.07R Stopped

Keep going

Explore this pattern further with live data.