The Falling Three Methods pattern is a bearish continuation pattern that appears in a downtrend.
This Japanese candlestick pattern consists of at least five candlesticks but may include more. A long black body is followed by three small body candles, each fully contained within the range of the high and low of the first candle. The fifth candle closes at a new low.
To identify the Falling Three Methods pattern, look for the following criteria:
Look for a series of five candles in a downward price trend.
The first candlestick in this pattern is a dark bearish candlestick with a large real body.
The first candle will be followed by three or more short white (or green) candles. The next three candlesticks have smaller rising candlesticks that are bullish and light in color. These candlesticks should not exceed the high or the low of the first candlestick.
The short candles should be followed by another long black candle.
This last candlestick that completes the pattern must close below the previous candlestick and close lower than the close of the first candlestick.