Rising three methods patterns are bullish. They are the candlesticks that we find inside bull flag patterns. The flag pole consists of either a big bullish candle or several candles where the price moves up consecutively. Next, three smaller bearish candles create the pullback within the pattern. Look for a breakout when the price breaks above the third pullback candle and holds that level.
What Is a Rising Three Methods Pattern?
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 comprise five candlestick chart patterns. The rising three methods pattern is bullish. So, if you’re a bear, you won’t like seeing this pattern appear on your charts when you’re short.
This is an example of a rising three methods pattern. The blue candlesticks indicate bullishness, and the orange candlesticks indicate bearishness. You’ll see that this is a bull flag pattern. The two blue candlesticks formed the flagpole. The three bearish candlesticks were consolidation candles, which formed the flag. Then there was the bullish breakout candle, which would have been your entry point for a long position. Traders would put their stop levels if the price failed the breakout and closed below the flag area.
Why Rising Three Methods Are Popular
For starters, these patterns are used to predict a continuation of a trend. 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 are a consolidation. Then, the bullish trend is back on. This pattern indicates that sellers lack confidence in reversing the trend, and buyers remain in control. The rising three methods patterns are bullish.
Rising Three Methods Example
In the chart above, $NFLX had a nice Rising three methods pattern, which led to a strong rally following its completion; the chart above was created with TrendSpider, one of the best automatic candlestick pattern recognition tools.
Notice how $NFLX was in a nice daily uptrend and consolidated after a huge move from mid-May to the beginning of April. After the pattern formed, three white soldiers formed as the stock aggressively ran. Looking at the breakout area above the rising three methods, you’ll notice another big bull flag pattern. It is the same as the preceding pattern. In this example, the rising three patterns were preceded by two major bull flag patterns.
Regarding the rising three methods pattern, I want to ensure that the stock is not at resistance when this pattern forms. The trader wants the stock to have room to move when going long.
Patterns are constantly forming on stock charts, both large and small. Rising three methods patterns are larger than two and three candlestick patterns but smaller than rising wedge patterns or falling wedge patterns.
Example #2
In the chart above, an hourly three methods pattern emerged, leading to slight continuation before exhausting in the supply zone. Note how the price trended above the 9 EMA on the monthly time frame. The rising three methods do not always continue after completion; patterns fail!
You’ll notice several major cup and handle and inverse head and shoulders patterns in this picture, with a bigger overall cup pattern that failed. The handle was extended for a while below the supply zone, and price action attempted to move back up to that level again, but created a tweezer top failure and, ultimately, the breakdown of the cup and handle. Use proper risk management techniques when trading the rising three methods.
Rising Three Methods Pattern Trading Strategy
- Watch for a bullish candlestick that forms a flag pole.
- Look for three consolidation candles that hold support levels.
- Once the price breaks above the 3rd consolidation candle, take entry at a break of the high.
- Watch if the price can break above the high of the flag pole.
- Use the candlestick close below the 3rd candle as your stop.
Frequently Asked Questions
This consists of three consecutive green or white candlesticks, each with a close higher than the previous one. This pattern is known as the Three White Soldiers or Three Advancing Soldiers. It shows that the bulls are in control. Please keep in mind a possible reversal on the fourth or fifth candle. Price action often gets overextended, so be aware of a potential reversal after three consecutive bullish candlesticks.
The three candle rule refers to the formation of three consecutive bullish candlesticks that create the three white soldiers pattern. It's essential to watch for a possible reversal due to price overextension. Often, the short sellers or bears come in on the fourth candlestick.
