Definition
Bearish Falling Three Methods reflects a short stop in the trend without showing a change in the price’s direction. There are three long black candles followed by three consecutive short candles. The signal is more reliable if the short candles are white, but the colour is not important. The short candles’ body stay within the trading range of the first candle. The pattern is finished by a long black candle closing at a new minimum. The short candles reflect a short stop, not a trend reversal.
- Trend: Continuation
- Expected trend: Bearish
- Previous trend: Bearish
- Reliability: Low
- Type: Bearish
- Number: 5
Recognition
- The market is in a downward trend.
- The first day is a long black candle.
- The second, third, and fourth days are short candles formed in the opposite direction of the trend.
- The fifth day is also a long black candle which closes below the first day’s closing price.
Interpretation
The trend is inclining, but there is a correction phase between day 2 and 4. The last candle of the pattern stops the correction. If the black candle closes below the first day’s closing price, there is a high chance for the trend’s continuation.
Important factors
The rules for the first day include the shadows as well. The reliability of the formation is low, a confirmation is needed. It can come from a black candle with a downward gap or a lower closing price.
