Falling Three Methods

Name Type Prerequisite Use Cases
Falling Three Methods Bearish Continuation OHLC Data Confirming trend continuation.

Definition

A bearish continuation pattern. A long red candle is followed by three small green candles (contained within the first candle's range), and then a fifth long red candle that breaks below the first candle's low.

Pattern Structure

  1. Candle 1: Long red.
  2. Candles 2-4: Small, mostly green, consolidated within Candle 1's range.
  3. Candle 5: Long red, closes below Candle 1's close.

Visualization

Falling Three Methods

Story

During a brutal downtrend, bottom-feeders attempt to mount a weak recovery. Over three small, hesitant bullish sessions, they manage to push the price slightly up, but fail to exceed the high of the initial massive red candle. On the fifth day, the dominant bears crush this feeble rebellion with a massive red candle, utterly destroying the brief optimism and confirming that the downward spiral is far from over.

Trading Significance

  1. Brief Pause: Sellers take a rest, but buyers can't push price up significantly.
  2. Trend Resumption: The final candle confirms the downtrend is resuming with strength.