How To Use Rising and Falling Window Candlestick Pattern

The falling three methods and rising three methods have been able to provide traders with a unique opportunity to be able to get back into a missed trend, and generally the prices of any given asset including stocks that don’t move in a straight line, but there are up and down swings that give traders a second chance to be able to reenter the market.

What Are The Falling & Rising Three Methods?

The falling three methods is a bearish trend continuation pattern that develops under a bearish trend and indicates an extension to the current trend, and it is a candlestick pattern, made up of five candles where the first and last candles are bearish, which are moving in the direction of the prevailing trend, and after the first bearish candle, the second through fourth candles indicate corrective momentum, while then the fifth candle becomes bearish again and completes with the continuation pattern, and similarly, the rising three methods is a bullish continuation pattern that develops under a bullish trend, and the rising three methods pattern is the exact opposite of the falling three methods pattern, and in it the first and last candles are bullish, but once the candlestick formation is completed then the price will likely follow the prevailing bullish trend until a significant reversal scenario appears.

Both the falling and rising three methods are trend continuation patterns, similar to a basic flag pattern or pennant pattern that can show a consolidation before the prevailing trend can resume.

Why Are Falling and Rising Three Methods Useful?

Traders can take advantage of trend continuation chart patterns when the prices move under a trend, and in any trading strategy, trading with the trend provides a higher probability of being able to be successful, while one of the basic characteristics of a trend is that the prices follow an impulse-correction pattern, and this concept perfectly matches the rising three methods and falling three methods, while an impulse price movement occurs when the price makes a sharp movement which indicates strong momentum, and after an impulse movement a correction happens where the price then barely makes new highs or lows, wherein impulse price movement usually appears after a correction, which indicates that the trend is likely to continue, these methods show the same impulse-correction pattern that helps traders identify upcoming price movements, and are very effective because they perfectly match the basic characteristics of a trend, and even if it can often be difficult to find the exact price formation, the success rate will be higher for this candlestick pattern and especially if the market trend is stronger.

Falling Three Methods

It combines at least five candlesticks which are two bearish candlesticks and three bullish candlesticks, to be more specific the pattern is as one bearish and at least three bullish candlesticks, followed by a final bearish candlestick. 

But the falling three methods pattern needs to satisfy the following price characteristics:

  • The first candle should be bearish, with a large real body & a short tail.
  • The first candle will be followed by three or more bullish, or green, candles, and the bodies of these bullish candles should be smaller than that of the first candle, and they should not be able to break the high of the first candle.
  • The last short candle should be followed by a strong bearish or red candle, which then completes the pattern, and the last candle should close below the first candle’s low and its body should be as strong as the first candle’s.

Rising Three Methods

It is also a combination of at least five candlesticks, with two bullish and three (or more) bearish candles, to be more specific the first bullish candle is followed by at least three bearish candles, and the final bar is a bullish candlestick, while the rising three methods pattern needs to satisfy the following price characteristics:

  • The first candle should be bullish, with a larger real body and a shorter tail.
  • The first candle will be followed by three or more bearish, or red, candles, and the bodies of these bearish candles should be smaller than that of the first candle, and they should not be able to break the bottom of the first candle.
  • The last short candle should be followed by a stronger bullish or green candle, which completes the pattern, and the last candle should close above the top of the first candle, and its body should be as strong as the first candle’s.

How To Trade With The Falling and Rising Three Methods 

In the above section one would have seen how to identify the falling and rising three methods patterns in stocks trading, but using these methods blindly is not recommended with any stocks, but when we talk about financial trading, one needs to follow certain rules, but once the conditions of all of these rules are satisfied, one can make the trade, therefore making trades based on the falling and rising three methods is a systematic approach that includes both trade and risk management, another approach is to open a buy position when the price moves above the high of the final candle, and in any case, traders should closely monitor towards the last candle and the pattern is valid once the last candle has been closed.

Stop Loss for Entry and Exit Points

In a rising three methods pattern, the last candle is very important, as it defines the trend continuation after a correction, and due to which the price is likely to move higher as long as it’s trading within the body of the last candle, but if the price moves below the first candle’s low, the trend continuation pattern is invalidated, and due to which the aggressive approach is to set the

stop loss below the final bullish candle, and the conservative approach is to set the stop loss below the first candle’s low, and in both cases, traders should use some buffer, as the same rule applies to the falling three methods pattern, where the aggressive stop loss is above the fifth candle, and the conservative stop loss should be able to be above the candle.

Determining the Take Profit Levels

After opening the trade, traders should be waiting for a reason to get out of the market, and with a rising three methods pattern, the primary anticipation is to hold the trade until a major resistance level appears, but in that case, traders should be able to find important price barriers in the higher time frame to be able to increase their success rate, and besides in intraday trading, but traders should remain cautious about the long-term market trends, and with the falling three methods pattern traders should get out of the market when the price reaches towards any significant support level.

Risk Management

The most important risk management rule is to able to use proper position sizing, and to be able to calculate how much one is willing to lose on any particular trade setup, and even if the trading setup is strong, it’s unwise to use more than 2%–5% risk per trade, and lastly after making the trade managing the risk is important, one should move the stop loss at breakeven as soon as the price reaches a 1:1 risk-to-reward to make the trade risk-free.

Conclusion

The falling and rising three methods patterns are effective with any stock asset, but one would have to conduct research to get the maximum benefit from this system, although this strategy is effective in both bullish and bearish trends, it’s not wise to focus heavily on a single pattern, while the best approach is to identify the overall market direction and to be able to match this pattern with the support of other candlesticks.

How To Use Rising and Falling Window Candlestick Pattern

The falling three methods and rising three methods have been able to provide traders with a unique opportunity to be able to get back into a missed trend, and generally the prices of any given asset including stocks that don’t move in a straight line, but there are up and down swings that give traders a second chance to be able to reenter the market.

What Are The Falling & Rising Three Methods?

The falling three methods is a bearish trend continuation pattern that develops under a bearish trend and indicates an extension to the current trend, and it is a candlestick pattern, made up of five candles where the first and last candles are bearish, which are moving in the direction of the prevailing trend, and after the first bearish candle, the second through fourth candles indicate corrective momentum, while then the fifth candle becomes bearish again and completes with the continuation pattern, and similarly, the rising three methods is a bullish continuation pattern that develops under a bullish trend, and the rising three methods pattern is the exact opposite of the falling three methods pattern, and in it the first and last candles are bullish, but once the candlestick formation is completed then the price will likely follow the prevailing bullish trend until a significant reversal scenario appears.

Both the falling and rising three methods are trend continuation patterns, similar to a basic flag pattern or pennant pattern that can show a consolidation before the prevailing trend can resume.

Why Are Falling and Rising Three Methods Useful?

Traders can take advantage of trend continuation chart patterns when the prices move under a trend, and in any trading strategy, trading with the trend provides a higher probability of being able to be successful, while one of the basic characteristics of a trend is that the prices follow an impulse-correction pattern, and this concept perfectly matches the rising three methods and falling three methods, while an impulse price movement occurs when the price makes a sharp movement which indicates strong momentum, and after an impulse movement a correction happens where the price then barely makes new highs or lows, wherein impulse price movement usually appears after a correction, which indicates that the trend is likely to continue, these methods show the same impulse-correction pattern that helps traders identify upcoming price movements, and are very effective because they perfectly match the basic characteristics of a trend, and even if it can often be difficult to find the exact price formation, the success rate will be higher for this candlestick pattern and especially if the market trend is stronger.

Falling Three Methods

It combines at least five candlesticks which are two bearish candlesticks and three bullish candlesticks, to be more specific the pattern is as one bearish and at least three bullish candlesticks, followed by a final bearish candlestick. 

But the falling three methods pattern needs to satisfy the following price characteristics:

  • The first candle should be bearish, with a large real body & a short tail.
  • The first candle will be followed by three or more bullish, or green, candles, and the bodies of these bullish candles should be smaller than that of the first candle, and they should not be able to break the high of the first candle.
  • The last short candle should be followed by a strong bearish or red candle, which then completes the pattern, and the last candle should close below the first candle’s low and its body should be as strong as the first candle’s.

Rising Three Methods

It is also a combination of at least five candlesticks, with two bullish and three (or more) bearish candles, to be more specific the first bullish candle is followed by at least three bearish candles, and the final bar is a bullish candlestick, while the rising three methods pattern needs to satisfy the following price characteristics:

  • The first candle should be bullish, with a larger real body and a shorter tail.
  • The first candle will be followed by three or more bearish, or red, candles, and the bodies of these bearish candles should be smaller than that of the first candle, and they should not be able to break the bottom of the first candle.
  • The last short candle should be followed by a stronger bullish or green candle, which completes the pattern, and the last candle should close above the top of the first candle, and its body should be as strong as the first candle’s.

How To Trade With The Falling and Rising Three Methods 

In the above section one would have seen how to identify the falling and rising three methods patterns in stocks trading, but using these methods blindly is not recommended with any stocks, but when we talk about financial trading, one needs to follow certain rules, but once the conditions of all of these rules are satisfied, one can make the trade, therefore making trades based on the falling and rising three methods is a systematic approach that includes both trade and risk management, another approach is to open a buy position when the price moves above the high of the final candle, and in any case, traders should closely monitor towards the last candle and the pattern is valid once the last candle has been closed.

Stop Loss for Entry and Exit Points

In a rising three methods pattern, the last candle is very important, as it defines the trend continuation after a correction, and due to which the price is likely to move higher as long as it’s trading within the body of the last candle, but if the price moves below the first candle’s low, the trend continuation pattern is invalidated, and due to which the aggressive approach is to set the

stop loss below the final bullish candle, and the conservative approach is to set the stop loss below the first candle’s low, and in both cases, traders should use some buffer, as the same rule applies to the falling three methods pattern, where the aggressive stop loss is above the fifth candle, and the conservative stop loss should be able to be above the candle.

Determining the Take Profit Levels

After opening the trade, traders should be waiting for a reason to get out of the market, and with a rising three methods pattern, the primary anticipation is to hold the trade until a major resistance level appears, but in that case, traders should be able to find important price barriers in the higher time frame to be able to increase their success rate, and besides in intraday trading, but traders should remain cautious about the long-term market trends, and with the falling three methods pattern traders should get out of the market when the price reaches towards any significant support level.

Risk Management

The most important risk management rule is to able to use proper position sizing, and to be able to calculate how much one is willing to lose on any particular trade setup, and even if the trading setup is strong, it’s unwise to use more than 2%–5% risk per trade, and lastly after making the trade managing the risk is important, one should move the stop loss at breakeven as soon as the price reaches a 1:1 risk-to-reward to make the trade risk-free.

Conclusion

The falling and rising three methods patterns are effective with any stock asset, but one would have to conduct research to get the maximum benefit from this system, although this strategy is effective in both bullish and bearish trends, it’s not wise to focus heavily on a single pattern, while the best approach is to identify the overall market direction and to be able to match this pattern with the support of other candlesticks.

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