Rising Three Methods Pattern in Candlestick Charting

What is a Rising Three Methods Pattern?

A bullish continuation candlestick pattern that occurs in an uptrend and whose conclusion sees a resumption of that trend. The decisive (fifth candle) is proof that sellers did not have enough momentum to reverse the uptrend.

What does the Rising Three Methods Pattern Signal?

Rising Three Methods is a bullish continuation candlestick pattern that occurs in an uptrend and whose conclusion sees a resumption of that trend. The decisive (fifth candle) is proof that sellers did not have enough momentum to reverse the uptrend. For a candlestick pattern to become a identified as a rising three methods, it must meet the following three (3) criteria:

1. The first pattern must be bullish
2. The second, third, and fourth candles are small and bearish. They are confined within the range of the first bullish candle.
3. The last, fifth bar is bullish, and closes above the high of the pattern.

The Rising Three Methods signals an interruption, but not a reversal, of the current uptrend. This pattern is important because it shows traders that the bears still do not have enough conviction to reverse the trend and it is used by some active traders as a signal to initiate new, or add to their existing, long positions.

Trading a Rising Three Method Pattern

Looking at the daily time frame of ETH (Ethereum) we can see a typical rising three methods pattern formed on Ethereum’s path to reach its local high at a little over $400. These three bearish candles signaled an interruption on its path up to hit this high, not a reversal. When you see the rising three methods pattern on your chart, this is a good indication to add to your long position instead of pulling a short.

Looking at the 15-minute time frame of LTHM (Livent Corp) we can see 3 sets of the rising three methods pattern. On each one of these patterns painted on the chart, although some of them may not be your orthodox five candle pattern, they all represent a short-term bearish momentum before hitting new highs. On each one of these patterns it would’ve been smart to add to your long positions instead of trying to pull a short.

Differences Between the Rising Three and Falling Three Methods Pattern

The Rising Three and Falling Three Methods are continuation patterns that can appear in an uptrend or a downtrend. In an uptrend the pattern is known as the rising three methods and in a downtrend it is called the falling three methods. Both the three methods consists of five (5) candlesticks, hence the name they are opposites of each other. The falling three has the first and fifth candle painted bullish and the falling three methods has its first and fifth candle painted bearish.

Limitations of Rising Three Methods Pattern

Just like any candlestick pattern, trading solely based on the rising three methods pattern comes with its set of limitations. First, you need to figure out in which direction the market is heading. If you’re trading and spot this pattern in the middle of a downtrend or bearish momentum, chances are this pattern isn’t valid and you need to pause and reflect. This pattern consisting of five candles is correctly identified in the middle of a bullish uptrend, pulling back swiftly as traders are taking profits, before trending to an even higher trading price.