Rising Three Methods is a pattern of bullish trend continuation. This pattern is very useful in an upmarket. In this article, I will introduce you to this special candlestick pattern. Along with that is how to trade Forex effectively with this pattern.
What is a Rising Three Methods pattern?
This is a bullish trend continuation pattern consisting of 5 candles. The first candle is a strong bullish one followed by 3 bearish candles but with a short height and ended with a bullish candle. This is a warning signal that the price will continue to increase in the future.
Structure and characteristics
The Rising Three Methods pattern has the following recognizable characteristics:
+ The first candle is strongly bullish and has a long body.
+ The next 2 or 3 candles move downwards in a sloping direction, but not beyond the first candle.
+ The last candle must rise sharply and go beyond the closing price of the first one.
+ If a gap appears between the 4th and 5th candles, the effectiveness of the pattern will become higher.
Psychological movements within the Rising Three Methods pattern
This pattern signals a continuation of the uptrend. It often occurs during uptrends. Often after this pattern, the market will continue to go up strongly.
After the market creates a bullish candlestick, some traders begin to take profits. At that time, the buyers temporarily give up the game to the sellers. However, prices go down at a slow rate. After 3 sessions, the decrease is still not equal to the increase in just one previous session, showing that the selling force is not strong enough and the market confidence is still there.
Next, a very long bullish candlestick appears, confirming the continuation. It creates confidence for those who are hesitant and pours a bucket of cold water down on those who have just placed SELL orders in the previous 3 sessions.
How to trade Forex with the Rising Three Methods pattern
Here, I will guide you on how to place orders effectively with this pattern in Forex. This is a signal of a continuation of the uptrend. Therefore, please focus on opening BUY orders when the Rising Three Methods pattern appears.
+ Entry Point: As soon as the price completes the Rising Three Methods candlestick pattern.
+ Stop-Loss: At the opening price of the first candle.
+ Take-Profit: when the price touches old resistance levels that have been formed in the past.
Notes when using this pattern in trading
+ When trading with this pattern, it is best not to trade at strong resistance zones because these zones create strong resistances that limit the possibility of the uptrend continuation.
+ Some traders often prefer to open orders before the completion of the 5th candle to get better buy points. However, with this entry way, you need to react quickly to sudden market fluctuations. Therefore, this may not be suitable for new traders.
Above is an article about the Rising Three Methods pattern provided to you by howtotradeblog. Get familiar with this pattern on a Demo account before switching to live trading with it.