A reversal pattern of three symmetrical drives into a top or bottom. Each drive extends by a Fibonacci ratio and the corrections between them retrace by a Fibonacci ratio. When the three drives line up symmetrically in price and in time, the completion of the third drive marks a reversal from an exhausted trend.
The three drives pattern is one where price pushes the same way three times, symmetrically, and then reverses.
Into a top it sets three higher highs in three stages; into a bottom it sets three lower lows in three stages. Each of these three impulse waves is called a drive.
What sets it apart from a plain three-step rally or selloff is that the size of the drives and the corrections between them line up cleanly by Fibonacci ratios.
Each drive extends from the prior correction by a Fibonacci extension of 1.272 or 1.618, and each correction (retrace) between drives settles at a 0.618 or 0.786 pullback. The ideal is for the three drives and the two corrections to come out roughly symmetrical, both in range and in time.
It is a harmonic pattern, known as Three Drives.
At the point where the third drive completes, you look for a reversal from an exhausted trend (the extreme of overbought or oversold).
The more the symmetry breaks down, the weaker the signal. So treat this pattern not as "it moved three times, so fade it" but as fade it only after confirming the three moves lined up at equal intervals.
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