Three-Bar Play
The Three-Bar Play trades continuation after a controlled pullback.
The Three-Bar Play trades continuation after a controlled pullback. A strong momentum bar shows committed buying (the ignition), the next bar pauses quietly without giving the move back (the rest), and the third bar breaks out above that pause to resume the trend (the trigger). It is a pattern that rides an existing up-move rather than trying to pick a bottom, so the exit simply trails the 20-day EMA and lets the trend run.
It is a medium-difficulty, trending, intraday-or-daily momentum strategy. Pattern recognition is the whole game - the value is in reading the three bars correctly.
How it trades
| Ingredient | Meaning |
|---|---|
| THREEBARPLAY() | 1 when the last three bars form a valid ignition -> pause -> breakout play, else 0 |
| EMA(20) | The 20-period exponential moving average - the exit line |
Buy (the play completes):
THREEBARPLAY()
Sell (loses the trend line):
Close < EMA(20)
When it works best
A clean continuation setup in an established up-move: the ignition proves demand, the shallow pause proves supply is contained, and the breakout proves buyers are still in charge. It rewards trending markets and, because it demands a specific three-bar shape, trades selectively rather than often.
Backtest this strategy yourself
Build these rules on the Free plan, adjust them, and see how they would have traded.