Three drives is a harmonic pattern. Three successive pushes in the same direction, each one separated by a clean retracement. The idea is that by the time the third drive completes, the trend is running out of fuel. The reversal sets up.
The pattern reads like a story. First push: trend is strong. Second push: trend extends but with more effort. Third push: trend reaches for one more high or low and fails. The market is tired.
Symmetry is the key. Each drive should look similar in time and price. Each retracement should look similar. If the pattern looks lopsided, it probably is not a clean three drives.
The entry waits for the third drive to complete and show reversal signs. A wick rejection. A bearish engulfing candle. A failed retest of the third drive high. The pattern is complete, but it still needs confirmation.
Aggressive entry takes the reversal candle. Conservative entry waits for a break of the third drive's swing structure.
Stop sits just beyond the third drive extreme. For a bearish three drives at the top, stop is just above the third drive high. Small stop. If price extends through that level, the exhaustion thesis was wrong.
First target is retracement B. Price often retraces back to that level after the reversal. Second target is retracement A. The full pattern target is the start of drive one.
Partial profits come at each level. Trail the rest if the broader trend is turning with the reversal.
Three drives shows up on all timeframes. Daily and weekly carry the most weight. Intraday versions show up for active traders but have more noise.
The pattern carries the most weight when it forms at a known level. Three drives into major resistance at a Fibonacci extension is, in my view, the strongest version.
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