What is a Three-Drive Pattern?
The three-drive pattern is a lot like the ABCD pattern except that it has three legs (now known as drives) and two corrections or retracements. This three-drive pattern is similar to the Elliott Wave pattern.
Refer to the charts above, point A should be the 61.8% retracement of drive 1. Similarly, point B should be the 0.618 retracements of drive 2. Then, drive 2 should be the 1.272 extensions of correction A and drive 3 should be the 1.272 extensions of correction B.
By the time the whole three-drive pattern is complete, that’s when you can pull the trigger on your long or short trade. Typically, when the price reaches point B, you can already set your short or long orders at the 1.272 extensions so that you won’t miss out oh the setup.
Some rules for a valid Three-Drive Pattern
The time it takes the price to complete drive 2 should be equal to the time it takes to complete drive 3.
The time to complete retracements A and B should be equal.