Falling Three Method |
Characteristic of Candlesticks: Reversal
Relevance of Candlesticks: Bearish
Prior Trend of Candlesticks: Bearish
Reliability of Candlesticks : Recommended
Confirmation of Candlesticks: Reliable
Candlestick Patterns Key Reference |
DESCRIPTION
Falling Three Method is a five candlestick formation pattern.
Falling Three Method pattern is best when all the three bodies of the candlesticks are bullish, however they can also be mixture of bullish and bearish.
All the three candlesticks
must all be contained within the high and low range of the first bearish candlestick.
Falling Three Method pattern is completed by a long bearish candlestick which close at a new low which indicate that the bears are finally in control.
The short-term uptrend between the two long bearish candlesticks simply indicate that market is resting. After its rest, the downtrend will continue.
PATTERN RECOGNITION
1. Falling Three Method pattern can be identified by downtrend.
2. Refering to above diagram, we will firstly see a long bearish candlestick.
3. Then we will see three small real bodies bearish candlesticks which reflect a short-term uptrend. However these candlesticks remain within the range of the first long bearish candlestick.
4. Finally we will see the fifth long bearish candlestick which open near the previous candlestick's close and it close below the close of the first long bearish candlestick, hence breaking a new low.
EXPLAINATION
Falling Three Method is a continuation pattern which shows a temporary pause in the market trend.
The temporary pause in the market trend indicate that there is some doubt from the sellers if the downtrend will continue which causes a short-term uptrend.
However, we noticed that since a new high cannot be made, the bearish sentiment resumed and we notice the market break a new low by the last long bearish candlestick.
The Continuation Patterns imply that a trend has temporary paused and will continue its original trend rather than reversal.
POINT TO NOTE
Falling Three Method pattern high and low range includes the shadows.
The reliability of
Falling Three Method pattern is very high but a confirmation is required in a form of a bearish candlestick with a lower close is suggested.
CANDLESTICK PATTERNS KEY REFERENCE
Irrespective of Color (Can be bullish or bearish) |
Uptrend |
Consolidation |
Downtrend |
ANTICIPATED DIRECTION OF TREND
Lighter Arrow = Lower Probability
Solid Arrow = Higher Probability
More Likely to go sideway, Less likely to rally
|
More likely to rally, Less likely to go sideways
|
More likely to go sideway, Less likely to fall
|
More likely to fall, Less likely to go sideways |
