Harmonic and chart patterns
Three drives pattern
Three pushes in the same direction, each separated by a pullback, often with Fibonacci proportions: a sign of exhaustion.
The idea in plain words
When the market keeps pushing to new highs in three similar steps, each needing a pullback to gather strength, the trend is often running out of energy.
How it is calculated
Click the start, drive 1, pullback A, drive 2, pullback B and drive 3. The tool shows each leg's ratio to the previous one. After B it draws where drive 3 is likely to end (1.272 or 1.618 × the pullback); after drive 3 it draws the targets (back to B, then back to A) and a stop at 1.272 × the last drive.
Pullbacks A and B usually retrace 0.618–0.786 of the drive before
Drives 2 and 3 usually extend 1.272–1.618 of the pullback beforeHow to use it
- After the third drive, look for a reversal, especially with divergence on an oscillator.
Drawing conclusions
- The more symmetrical the drives in size and time, the more classic the pattern.
Example
A stock makes three highs about two weeks apart, each 1.27 times the previous pullback, while RSI makes lower highs: a three-drives top.
Prices in examples are illustrative.
Watch out for
- A fourth drive is possible; wait for a break of the last pullback low.
A little history
Described by Larry Pesavento among others in the harmonic trading tradition.
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.