Falling Three Methods
19 hours agoThe Falling Three Methods pattern is a bearish continuation pattern that emerges during a downtrend. This Japanese candlestick formation consists of a minimum of five candlesticks, though it can include more.
The pattern begins with a long black body, followed by three small body candles, each entirely contained within the range of the high and low of the first candle. The fifth candle closes at a new low.
Recognition Criteria
The Falling Three Methods pattern comprises a total of five candlesticks: two long and three short. More specifically, it consists of one long, three short, and one long candle.
To identify the Falling Three Methods pattern, look for the following criteria:
- Observe a series of five candles in a downward price trend.
- The first candlestick is a dark bearish candle with a large real body.
- This first candle is followed by three or more short white (or green) candles. These subsequent three candlesticks are smaller, bullish, and light in color, remaining within the high and low of the first candlestick.
- The short candles should be succeeded by another long black candle.
- The final candlestick that completes the pattern must close below the previous candle and lower than the close of the first candle.
Meaning
Since this pattern begins with a long black candle, it indicates that the bears are stronger than the bulls. However, after the first candle, the price pauses momentarily, forming the three short candles in the center, which are within the range of the first candle.
The bulls fail to push the price above the height of the initial long candle and are ultimately overpowered by the bears. Consequently, the price is driven downward again, resulting in another long black candle that closes below the first candle.
The Three Methods Pattern
The Three Methods pattern consists of at least five candlesticks but may include more. It is a trend continuation pattern that can manifest in either an uptrend or a downtrend.
In an uptrend, it is referred to as the Rising Three Methods pattern, while in a downtrend, it is known as the Falling Three Methods pattern.
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