The Bearish Falling Three Methods Pattern is a continuation
pattern, which shows a temporary break in the trend
of prices without causing a reversal. The pattern is
characterized by a long black candlestick during a downtrend,
which is then followed by small consecutive small bodies
that look like a short uptrend. It is better if all
the bodies of these three days are white however they
can also be of mixed color. These small bodies however
must all remain within the high-low range of the first
day's black candlestick. The pattern is completed by
a long black candlestick, closing at a new low and showing
that bears are finally taking over. The small uptrend
between two long black days simply shows a market break.
After this temporary break, the downward trend continues.
Recognition Criteria:
1. Market is characterized by downtrend.
2. We see a long black candlestick in the first day.
3. We then see three small real bodies defining a brief
uptrend on the second, third, and fourth days. However
these bodies stay within the range of the first day.
4. Finally we see a long black candlestick on the fifth
day opening near the previous day’s close and also
closing below the close of the initial day to define a
new low.
Explanation:
The Bearish Falling Three Methods Pattern is a continuation
pattern marked with a temporary break in the overall
trend of prices without causing a reversal. The temporary
break shows that there is some doubt about the ability
of the trend to continue. This doubt increases as the
small-range reaction days take place. However, given
the fact that a new high cannot be made, the bearishness
is resumed and new lows are set quickly.
Important Factors:
The high-low range includes the shadows.
The reliability of this pattern is very high. However,
a confirmation in the form of a black candlestick with
a lower closing is still suggested.
Disclaimer
The candlestick patterns explained herein are intended to inform.
They come with no warranty of any kind. If you should choose this
information for your investment decisions, you do so at your own
risk. Investing can be a very dangerous venture and it is you who
must assume the entire cost and risk involved in all of your investment
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