Rising and Falling Three Methods

What the pattern is

The rising three methods and falling three methods are continuation patterns. A continuation pattern suggests that an existing trend may carry on after a short pause. Each one starts and ends with a long candle in the trend direction. Between them sits a short run of small candles that move against the trend.

The rising version appears in an uptrend. The falling version is its mirror image and appears in a downtrend.

Drawn example: rising three methods

This sketch is for illustration only and shows no real prices. ███ is a bullish body and ▓ is a bearish body.

For the falling three methods, turn the picture upside down. It begins with a long bearish candle, then small bullish candles drift up inside its range, and it ends with a long bearish candle that closes below the opening candle's low.

Formation rules

For the rising three methods:

• A clear uptrend is in place before the pattern.
• The opening candle is a long bullish candle with a real body (the part between open and close).
• A short run of small candles follows. They are usually bearish and drift lower, but they stay within the high-low range of the opening candle.
• The closing candle is a long bullish candle that closes above the opening candle's close. Stricter definitions require a close above its high.

For the falling three methods, reverse every rule. The trend is down, the long candles are bearish, the small candles drift up, and the final close is below the opening candle's close or low.

Some traders accept a middle candle of the other colour, as long as all middle candles stay inside the opening range. A middle candle that breaks out of that range turns the setup into something else.

What it says about buyers and sellers

In the rising version, buyers push price up strongly. Sellers then take some profit or test the move, but they cannot push price below the opening candle's low. The small bodies show that this counter pressure is weak. When the closing candle breaks higher, buyers are back in control. The falling version describes the same thing with the roles reversed.

Where it matters: context

• Trend. The pattern only has meaning inside an existing trend. In a sideways market it is just a range.
• Levels. A closing candle that also breaks a support or resistance level from technical analysis carries more weight than one in the middle of nowhere.
• Timeframe. Daily and four-hour charts filter out much of the noise of short intraday charts. On very short timeframes, small candles appear all the time and the pattern loses meaning.

Why it often fails in isolation

• The middle candles may be the start of a real reversal and not a pause.
• The closing candle may be a false breakout that reverses on the next bar.
• A news release can produce a long candle that has nothing to do with order flow in the pattern.
• A loose reading, such as middle candles that leave the range or a closing candle that barely clears the level, produces many weak setups.

The pattern describes what happened. It does not predict what comes next.

How traders look for confirmation

Traders often wait for the next candle to hold above the closing candle (or below it in the falling version). They also check volume where it is available, the direction of a moving average and nearby levels. Many compare it with related patterns such as Three White Soldiers and Three Black Crows, and with the inside bar, which has a similar structure.

Leveraged CFD and forex trading can lose money fast. A pattern is not a reason to skip a stop-loss or proper position sizing. See risk management.

Frequent questions

Is the three methods candlestick pattern bullish or bearish?

The rising three methods is a bullish continuation pattern and the falling three methods is a bearish continuation pattern.

Must the middle candles all be the same colour?

Not always. The key rule is that they stay inside the opening candle's range and have small bodies.

How is it different from a flag?

It follows similar logic but uses individual candles in a tighter, defined structure. Flags are covered under chart patterns.

Can I practise spotting it?

Yes. You can mark past examples on historical charts or on a demo account with no real money at risk. More patterns are listed on the candlestick patterns page.