Rising Three Methods
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.
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What Are Rising Three Methods Patterns?
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.
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. Rising three methods patterns are bullish patterns.
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.
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!
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.