Rising Three Methods Candlestick Pattern – What Is And How To Trade

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
What Is The Success Rate Of The Rising Three Methods?
This is what you learned today
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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.