Are Three White Soldiers Immune to Hand Grenades? Part II.

In Western candlestick theory, the “Three White Soldiers” formation is considered to be a rare but extremely bullish pattern. As usual, when dealing with candlesticks location is significant. After a prior downtrend or a period of a consolidation, we are looking to see three consecutive long white (or green) candles that close at or near the highs of each day, and overlap the upper half of the prior candle. As an aside, if we see the Three White Soldiers after an extended uptrend, it can actually be a sign of a blow-off top.

In my previous post, I noted how the biotechnology sector as a whole looked to be consolidating well after an impressive run up in March and April. Despite the fact that I rarely trade biotechs due to their reputation for being pinless hand grenades, capable of blowing up traders’ accounts at the drop of a hat with a surprise FDA announcement, there is no sense in denying the highly constructive price action and volume patterns that I am seeing in many of those charts lately. In other words, the sector remains bullish and is seeing inflows of capital.

In addition to the charts below (note how CORT illustrates the Three White Soldiers), many other biotechs impress me here, including: ANDS CYCC CDXS ONCY RXII TLCR.

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