Rising three methods patterns are bullish. They are essentially the candlesticks that we find inside bull flag patterns. The flag pole consists of either a big bullish candle or several candles where price moves up consecutively. Next, there are three smaller bearish candles that create the pullback within the pattern. Look for a breakout when price breaks above the third pullback candle and holds that level. Watch our video on how to identify and trade rising three methods patterns.
What Is a Rising Three Methods Pattern & How do You Identify These Patterns?
As mentioned above (repetition is key!) A rising three methods pattern consists of a larger bullish candlestick which forms the flag pole. It’s then followed by three smaller consolidation candles, completing the flag. You will see many rising three methods patterns that consolidate near support levels, and then when support holds, watch for price action to break out of the flag.
These patterns are comprised of five candlestick chart patterns. The rising three methods pattern is a bullish pattern. So if you’re a bear, you will not like seeing this pattern show up on your charts when you are short!
Why are these patterns so popular? Good question. Well, for starters, these patterns are used to predict a continuation of a trend. And who doesn’t want to know where a stock may be headed next? One thing of note, this type of pattern is a little larger than most small patterns.
Always remember this, “candlesticks tell a story” Group them together, and you have chapters within the story. The more candlesticks that are together, the bigger the pattern that is formed. Japanese candlestick patterns tell traders not only what other traders are feeling (and doing) but also trend and direction.
Greed and fear move markets. It’s important to be able to tell how others are feeling about a particular stock. This allows you to trade it correctly.
Basics of Rising Three Methods Patterns
Rising three methods patterns are made up of five candlesticks. The first candlestick is a large green candlestick. This candlestick occurs as a part of a bullish uptrend.
Then there are the candlesticks in a row. They should be small bearish candlesticks. These three candlesticks trade above the low of the first bullish candlestick.
The fifth candlestick in the pattern is another bullish candlestick. As a result, this one creates a new high. That in turn suggests that the bulls are back in full control.
Those three small bearish candlesticks in the middle of this pattern is consolidation. Then the bullish trend is back on. This pattern tells you that sellers don’t have enough confidence to reverse the trend and buyers are still in control.
The stock market is a tug of war between buyers and sellers. This pattern informs you that the bulls are in control and are not going to let the bears gain a victory.
Technicals of Rising Three Methods Patterns
Rising three methods patterns are bullish stock trading patterns. Looking at the technical indicators can help to confirm a continuation.
In the chart posted below, you can see that $NFLX was in a nice daily uptrend, and consolidated after a huge move up from mid May to the beginning of April. After the pattern formed, three white soldiers formed as the stock aggressively ran.
You use candlesticks to draw trend lines as well as channels. All of these tools help to confirm or predict a move. It’s important to remember that this isn’t a crystal ball into the future of a stock. As with anything, confluence is key. What are the longer term trends of the stock? Are many time frames all agreeing that the price is bullish? If so, you have a higher probability of a favorable trade. Check your time frames multiple times before making the trade.
As far as the rising three methods pattern goes, you want to make sure that the stock isn’t at resistance when this pattern forms. You want the stock to have room to move as you go long. Look how far $NFLX moved below!
These are important levels that traders pay attention to. Make sure to pay attention to support and resistance whether you’re using swing trading techniques or penny stock trading strategies.
How to Trade Rising Three Methods Patterns
- How to trade rising three methods patterns:
- Watch for a bullish candlestick that forms a flag pole.
- Look for 3 consolidation candles that hold support levels.
- Once price breaks above the 3rd consolidation candle take entry at break of high.
- Watch if price can break above high of flag pole.
- Use candlestick close below 3rd candle as your stop.
Patterns are constantly forming on stock charts both large and small. Rising 3 methods patterns are larger than two and three candlesticks patterns but smaller than rising wedge patterns or falling wedge patterns.
Chart patterns usually form the large triangle patterns such as symmetrical triangle patterns or ascending triangle patterns. Then you zoom in and look for patterns like head and shoulders or cup and handles.
Inside those patterns are the small patterns like rising three methods patterns or engulfing patterns. All of these different patterns can affect price movement.
It can be the difference between a breakout or breakdown. In fact, patterns are constantly breaking down. That’s why you have to see patterns within patterns. You also need to know what candlesticks mean.
There could be a bearish candlestick forming the end of a bullish pattern like the rising three methods patterns and instead of going up, it goes down. All of this is really important stuff to know. Take our candlestick reversal patterns course.
In conclusion, rising three methods patterns are bullish continuation patterns. Make sure they aren’t forming at resistance as you want to be able to have room for the stock to continue up. What other patterns or trends are the three methods a part of? These are all important questions to ask yourself when considering what trade to make. Remember, confluence is key! Take our free online trading courses for beginners.