Falling Three Methods

Falling Three Methods

The Falling Three Methods pattern is a bearish five bar continuation pattern. The first bar is a down-close and a large body bar whereas the second, third and fourth bar are small body or down-close bars. The fifth and final bar is the continuation candle, being a large body down-close below the close of the initial bar. Review the video below to learn more:

What is the Falling Three Methods Pattern

Other than the first and last bars being large body bars, the second, third and fourth bars all have to close within the range of the first bar. Again, the fifth candle has to close below the close of the initial bar.

To identify large and small body candles, a minimum / maximum threshold has to be met, facilitated by a comparison to the average bar size found in the reference period. Both the minimum / maximum threshold, as well as the reference period used to establish the average, are adjustable.

Also, being a continuation pattern, the Falling Three Methods will occur during minor bearish swing trends. The trend bias specifications are user selectable via the indicator dialogue box, as per the deviation type and multiplier settings. The bullish equivalent to this pattern is the Rising Three Methods

As with other price action patterns, these patterns should be combined with other technical tools for confirmation, for example advanced momentum oscillators, volume analysis and / or channel indicators. A post showing how that may be achieved that was discussed in this post.

Other bearish candlestick patterns

Other bearish candlestick patterns include the bearish belthold, bearish engulfing, bearish harami, bearish harami cross, black marubozu, dark cloud cover, shooting star, gravestone doji, hanging man, evening star, evening doji star, long black candle, tweezers top and the three black crows.

TheFalling Three Methods and the above patterns may be identified with our candlestick pattern indicator for NinjaTrader 8. Check out the LizardIndicators Premium Section for more information.