Candlestick Patterns

Falling Three Methods

The Falling Three Methods is a continuation bearish pattern represented by five candles. During a downtrend, a long decreasing candle forms and is followed by three increasing candles with small bodies. Finally, a decreasing candle with a long body covers the previous three candles and closes below the previous low of that range. This pattern represents a pull-back. The first candle has a long body and decreases, which means that a lot of supply volume pushed the price down. Then the pull-back occurs. Three small-bodied candles increase to the level where the first candle opened. Finally, since it is a continuation pattern, the last candle continues decreasing and usually leads to further falls in the price. Therefore, this pattern signals sells.

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