The "falling three methods" is a bearish, five candle continuation pattern that signals an interruption, but not a reversal, of a current downtrend. The pattern is characterized by two long candlesticks in the direction of the trend—in this case, down—at the beginning and end, with three shorter counter-trend candlesticks in the middle.
KEY TAKEAWAYS
The "falling three methods" is a bearish, five-candle continuation pattern that signals an interruption, but not a reversal, of the current downtrend.
A falling three methods pattern is characterized by two long candlesticks in the direction of the trend, one at the beginning and end, with three shorter counter-trend candlesticks in the middle.
The falling three methods pattern shows traders that the bulls still don't have sufficient conviction to reverse the trend. It can be used by active traders as a signal to initiate short positions.
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