Everything that you need to know about the Rising Three Methods candlestick pattern is here.
Today you’ll learn:
- What Is The Rising Three Methods Candlestick Pattern
- How To Identify The Rising Three Methods Candlestick Pattern
- Variants Of The Rising Three Methods Candlestick Pattern
- How To Trade The Rising Three Methods Candlestick Pattern
- Strategies To Trade Rising Three Methods Candlestick Pattern
- Strategy 1: Pullbacks On Naked Charts
- Strategy 2: Trading The Rising Three Methods With Resistance Levels
- Strategy 3: Trading The Rising Three Methods With Moving Averages
- Strategy 4: Trading The Rising Three Methods With RSI Divergences
- Strategy 5: Trading The Rising Three Methods With Fibonacci
- Strategy 6: Trading The Rising Three Methods With Pivot Points
- What Is The Success Rate Of The Rising Three Methods?
- This is what you learned today
- Learn More
What Is The Rising Three Methods Candlestick Pattern
The Rising Three Methods is a Japanese candlestick pattern.
It’s a bullish continuation pattern.
Usually, it appears as a pause after a price move to the upside and shows rejection from lower prices.
The pattern is bullish because we expect to have a bull move after the Rising Three Methods appears at the right location.
It’s a continuation pattern because before the Rising Three Methods appears we want to see the price going up, thus it’s also a frequent signal of a trend continuation.
The Rising Three Methods pattern is also a mirrored version of the Falling Three Methods candlestick pattern.
How To Identify The Rising Three Methods Candlestick Pattern
The Rising Three Methods candlestick pattern is formed by five candles.
Here’s how to identify the Rising Three Methods candlestick pattern:
- Initially, you want to see a big green candle
- Followed by three small red candles
- The red candles don’t break the high of the first green candle
- Finally, another big green candle, closing above the other candles
It looks like this on your charts:
Variants of the Rising Three Methods Candlestick Pattern
The Rising Three Methods candlestick pattern may appear a little different on your charts.
The candles may or not have wicks.
The green ones should have them small.
The red ones, if they have wicks and are big, ideally we want to see them on the bottom of the candles.
Here’s what it may look like on your charts:
How To Trade The Rising Three Methods Candlestick Pattern
To trade the Rising Three Methods candlestick pattern it’s not enough to simply find a series of candles with the same shape on your charts.
Let me explain.
What makes a pattern valid is not just the shape, but also the location where it appears.
This means that the same shape appearing at different locations may have different meanings.
When trading the Rising Three Methods, we want to see the price first going up, making a bullish move.
A Rising Three Methods appearing after this bullish move is a sign of a possible trend continuation to the upside.
It looks like this:
Now you’re thinking.
“When do I open my trade?”
It’s simple, the Rising Three Methods pattern is traded when the high of the last candle is broken.
That’s your conservative trigger to go long.
It looks like this:
Now, you also want to protect yourself because when trading things don’t always move as we expect.
And for that, we use a stop loss.
There are several different types of stop losses.
The most common is to use the other side of the pattern to set it.
Like this:
But wait, don’t jump into trading the Rising Three Methods right yet.
There are a few more things to know.
Ideally, to increase the accuracy, we want to trade the Rising Three Methods candlestick pattern by combining it with other types of technical analysis or indicators.
Here are a few strategies to trade the Rising Three Methods pattern.
Strategies To Trade The Rising Three Methods Candlestick Pattern
Strategy 1: Pullbacks On Naked Charts
As a bullish continuation pattern, the Rising Three Methods is a great pattern to watch for when the price is on an uptrend.
Just wait for a pullback to start, and then spot when the Rising Three Methods appears.
That often signs the end of the pullback and the start of the new leg to the upside.
Here’s an example:
Strategy 2: Trading The Rising Three Methods With Resistance Levels
Support and resistance levels are great places to find entries.
Since we are looking for continuation moves to the upside, we want to trade the Rising Three Methods using resistance levels broken and then retested.
How does it work:
- Draw resistance levels on your charts
- Wait for the price to move to the upside hitting the resistance level and breaking it
- After that, you want to see the price coming back to retest the resistance
- Check if a Rising Three Methods appears at that level
- Go long when the price breaks the high of the last candle of the Rising Three Methods
- Set your stop loss and take profit levels, and expect a move to the upside
Here’s an example:
Strategy 3: Trading The Rising Three Methods With Moving Averages
Moving averages are great trading indicators to trade trends.
The idea here is to trade pullbacks to the moving average when the price is on an uptrend.
How does it work:
- Find an uptrend, with the price jumping above a moving average
- Wait for a decline in the price to the moving average
- Check if a Rising Three Methods appears at the moving average
- Go long when the price breaks the high of the last candle of the Rising Three Methods
- Set your stop loss and take profit levels, and expect another leg to the upside
Like this:
Strategy 4: Trading The Rising Three Methods With RSI Divergences
This is a bit different from the other trading strategies.
To find a bullish RSI Divergence we want to see the price on a downtrend first, making lower lows and lower highs.
Here’s how it works:
- Find a downtrend
- Mark the lows that the price makes after each leg to the downside
- At the same time compare the price lows with the RSI indicator
- When you see the RSI making higher lows while the price making lower lows, you found your divergence
- Now you wait until a Rising Three Methods appears at a price lower low, aligned with an RSI higher low.
- Go long when the price breaks the high of the last candle of the Rising Three Methods
- Set your stop loss and take profit levels, and expect a move to the upside
Like this:
Strategy 5: Trading The Rising Three Methods With Fibonacci
Another popular way of trading the Rising Three Methods candlestick pattern is using the Fibonacci retracement tool.
Fibonacci shows retracement levels where the price will tend to revert frequently.
Depending on the strength of the trend, different levels are more likely to work better with the Rising Three Methods pattern. Here you can learn more about the different Fibonacci retracement levels.
Here’s how the strategy works:
- You want to see the price on an uptrend
- Then you wait for a decline, they always happen at some point
- Pick your Fibonacci tool and draw the levels from the low to the high of the move
- When the price hits a Fibonacci level and prints a Rising Three Methods, that’s what you are waiting for
- Go long when the price breaks the high of the last candle of the Rising Three Methods
- Set your stop loss and take profit levels, and expect a move to the upside
Here’s an example:
Strategy 6: Trading The Rising Three Methods With Pivot Points
Pivot Points are automatic support and resistance levels calculated using math formulas.
If you are day trading, the Daily Pivot Points are the most popular, although the Weekly and Monthly are frequently used too.
Here’s how to trade the Rising Three Methods pattern with Pivot Points:
- Activate the Pivot Points indicator on your charts
- Check which Pivot Points are above the price, those will tend to work as a support when broken
- Ideally, you want to see the price on an uptrend
- Wait for a move to the upside to a Pivot Point level and a break
- At that level, you want to see a Rising Three Methods pattern appearing and retesting the level broken
- Go long when the price breaks the high of the last candle of the Rising Three Methods
- Set your stop loss and take profit levels, and expect a move to the upside
It looks like this:
What Is The Success Rate Of The Rising Three Methods?
According to the Encyclopedia of Candlestick Charts by Thomas N. Bulkowski (link), the Rising Three Methods candlestick pattern has a success rate of 79%.
This is what you learned today
- The Rising Three Methods is a five-candle pattern.
- To be valid, ideally, we want to see it during an uptrend.
- It’s a bullish continuation pattern, meaning that it signs a potential continuation of an uptrend.
- To increase the accuracy, you can trade the Rising Three Methods using pullbacks, moving averages, and other trading indicators.
- The winning rate of the Rising Three Method is 79%.
Now I want to hear from you.
Do you trade the Rising Three Methods candlestick pattern?
Let me know in the comments below.
Learn More
- List of all candlestick patterns explained
