Online Trading Blog

Falling three methods is a candlestick pattern which indicates bearish market continuation even after a temporary halt in trend. This is a multiple candlestick pattern which includes more than three candlesticks; of that first and last will be long bearish candlesticks. The middle candlesticks can be all white (bullish or colorless) or a mix of white and black (bearish or colored) candlesticks. Reliability is highest when all middle candlesticks are bullish.

The requirement of bearish falling three methods candlestick formation include,

• The pattern should be formed in a significant downtrend.
• On first day there should be a long bearish candlestick.
• First day candlestick should be followed by small-bodied candlesticks of following day whose real-body and/or shadow do not cross the range of first day candlestick.
• On last day there should be a long bearish candlestick which should be closed well below the first candlestick’s range.

Bearish falling three methods formation occurs when the bulls are unable to bring the price to new highs after a significant downtrend. This boosts the confidence of bears and prices are then taken to new lows.

Falling three methods is a highly reliable pattern of trend continuation. Reliability increases with shortening of real-body of middle candlesticks and reduction in trading volume on middle days. Confirmation of trend-continuation is still suggested which can be a new candlestick with lower closing.

NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage