The Three Movements pattern, also known as Three Indians, is a model from the graphical analysis method.
The essence of this pattern lies in finding a dynamic level of support or resistance built using 3 swings.
The mechanical aspect of the pattern involves removing liquidity from each subsequent swing, where smart money opens positions by liquidating stop orders of uninformed traders.
When forming the Three Movements pattern, there is often a divergence between price and indicator readings (RSI/MACD) or volumes.
The Three Drive Pattern graphical model allows identifying trend reversals at early stages of their formation.
The third touch is fundamentally important, after which it's possible to consider entry when forming other reversal candlestick patterns as confirmation of intention.
Typically, a true third touch occurs in the form of manipulation into the area of interest (untested supply/demand zone).
