Rising Three Methods
Rising Three Methods
Bullish Rising Three Methods is a trend continuation pattern that alerts traders to a weakening in the current trend. The long white candle of the first day is followed by three shorter descending candles. The smaller candles reflect trend resistance, which may include a trend reversal. These 3 candlesticks are usually black and part of their body remains within the price action range of the first day. The formation ends on the fifth day with another white candle. The opening price of this candle is higher than the closing price of the first day. The uptrend should continue. The three-way pattern is a trend continuation pattern that can occur in an uptrend or downtrend. In an uptrend it is called a three-way ascending pattern and in a downtrend it is called a three-way descending pattern. The three-way pattern consists of at least five candlesticks, but can contain more. It is similar to flag or pennant formations and also represents a period of congestion or consolidation.
Rising Three Methods Definition & Meaning
In order for a candlestick pattern to become a three-way ascending method, it must meet the following criteria:
1 The first pattern must be bullish.
2 The second, third and fourth candles are small and bearish. They are limited to the area of ββthe first bullish candle.
3The last and fifth bar is bullish and closes above the top of the pattern.
A rise of three indicates that the market has seen a slight pullback, but is still strong enough to go higher.
How to spot a rising three methods candlestick pattern?
The ascending three candlestick pattern has five candlesticks. The first and fifth are clear, usually indicated by the color green. These are long bullish candles. The second, third and fifth candles are dark, usually indicated in red. These are short bearish candles. In the figure below, the five candlesticks are assumed to represent five consecutive business days. However, as explained above, the ascending three candlestick pattern can occur in any trading period, i.e. it applies to both intraday trading and position trading.
Trading the Rising Three Methods Pattern
Entry β Traders can enter the market when the last bar of the pattern closes. Alternatively, a trade could be taken if the price breaks above the high of the last candlestick. Aggressive traders can look for entry before the last bar closes, but should be prepared to exit if the fifth bar does not complete the pattern.
Traders need to make sure that the ascending three-way pattern does not break below key resistance to ensure that the uptrend has enough room to continue. For example, a trend line or broad moving average slightly above the pattern could limit further gains. Resistance levels should be checked on longer term charts to increase the probability of a successful trade. The "three amount method" can be most effective when the wicks of the initial bullish candle, indicating the highest and lowest traded price for that period, are flat and form a whole number Read More...
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