The Ultimate Guide to Falling Three Methods Candlestick Patterns

Last updated: February 7, 2024

Falling Three Methods Pattern

The falling three methods candlestick pattern occurs when multiple smaller candle bodies are present in between two larger red extended candles:

Chart

General Identification & Interpretation

Steve Nison is credited with bringing Japanese candlestick charting to the West. In his book "Japanese Candlestick Charting Techniques" he describes falling three methods patterns with the following characteristics:

Typical characteristics

• The first candle in the pattern is a long red candle
• The last candle in the pattern is also a long red candle, but ideally closes below the first candle's close and opens below the previous candle's open.
• The middle candles in the pattern are smaller and appear either laterally or at slightly advancing prices, and they should occur between the ranges given from the first and last candles. Ideally these middle candles are green. While the shadows may fall out of the range given by the first and last candle bodies, the candle bodies should not

Examples of use as a trading indicator

• The bearish trend in play before the rising three methods pattern has been completed should remain after the completion of the pattern
• After this pattern has been completed, the price may have declined significantly

Other interpretations

• Similar to the Western bear flag or pennant

More for beginners

Check out our quick start guide to candlestick charting for more information if you are new to candlestick charting!