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A powerful single-candle reversal signal that appears at the bottom of downtrends, showing buyers stepping in to reject lower prices.
The Falling Three Methods is a bearish continuation pattern consisting of five or more candles. It begins with a large bearish candle, followed by three (or more) small bullish candles that stay within the range of the first candle, and concludes with another large bearish candle that closes below the first candle's close.
This pattern represents a brief pause or consolidation within a downtrend — the small bullish candles are a weak counter-rally that fails to reverse the trend. When the final bearish candle resumes the move, it confirms that sellers remain in control and the downtrend is intact.
The Falling Three Methods is the anatomy of a healthy downtrend in five candles. The first large bearish candle shows sellers driving price lower with conviction.
The three small bullish candles that follow represent weak counter-trend buying — perhaps short-covering or bargain hunters testing the waters. Critically, they never break above the first candle's high, showing that bulls lack the strength to reverse the move.
The final bearish candle is the verdict: sellers return with force, driving price to new lows below the first candle's close. The brief rally was nothing more than a rest stop in the downtrend. The market tested higher, found no conviction, and resumed falling.
Conservative: Enter short below the fifth candle's low.
Aggressive: Enter short at the close of the fifth candle.
Above the high of the entire pattern (first candle's high or the highest point of the small candles).
T1: Previous swing low. T2: Measured move equal to the first candle's range projected downward from the pattern's low.
Minimum 1:1.5. The pattern confirms trend continuation, so target the next logical support level.
The Falling Three Methods is a bearish continuation pattern, so context means confirming the existing downtrend is likely to persist. Unlike reversal patterns that fight the trend, this pattern works best when it aligns with prevailing momentum.
Mirror of rising three methods. The small bounces are just sellers reloading, not a reversal.
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