Understanding Candlesticks_13. Rising and Falling Three Methods

Lesson 13: Rising and Falling Three Methods

When you notice the five candlestick methods of bullish continuation pattern, the
Rising Three Method is significant. The first candlestick is the long bullish candle.
The next three are small bearish candles that fall within the range of the first candle.
- and the fifth is a long bullish candle again, that closes above the first candle’s
closing price.

Observe that the third candles can be bullish as well. The important thing is that
this is still trading within the range.

The Falling Three Method is a five candlestick bearish continuation pattern.
The first candlestick is a long bearish candle, the next three are small bullish candles
within the first candle’s range - and the fifth is the long bearish candle that manages
to close below the first candle’s close, creating a new low. As the Rising Three is a
bullish continuation pattern, we will only look for it in an up-trend.

As you can see after the move upwards, a long bullish candle appears. The
next three candles are small bearish candles - resulting from profit-taking - and the
next candle is a long bullish one, which takes out the previous candle high, signaling
a continued upward trend.

On the other side of the trend, we can find the falling three patterns. In a
down-trend, a long bearish candle appears, followed by three small bullish candles
and a long bearish candle that closes below the first candle’s close, signaling a trend
moving downward.