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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's Rising Three Methods

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Busted
Patterns
Candles Chart
Patterns
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Patterns
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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 04/21/2017
20,548 -30.95 -0.2%
9,134 7.68 0.1%
706 4.81 0.7%
5,911 -6.26 -0.1%
2,349 -7.15 -0.3%
YTD
4.0%
1.0%
7.0%
9.8%
4.9%
Tom's Targets    Overview: 04/17/2017
20,100 or 21,150 by 05/01/2017
8,500 or 9,500 by 05/01/2017
725 or 685 by 05/01/2017
5,950 or 5,650 by 05/01/2017
2,275 or 2,425 by 05/01/2017
Mutt Winners: None YTD

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

If you click on this link and then buy the book (or anything) at Amazon.com, the referral will help support this site. Thanks. -- Tom Bulkowski

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The rising three methods candlestick pattern reminds me of a measured move up chart pattern, only in miniature. The candlestick pattern begins with a tall white candle in a rising price trend, then three candle lines move against the trend followed by a resumption of the up move.

I do not find it a surprise that the rising three methods acts as a continuation pattern 74% of the time. I also do not find it surprising that the candlestick pattern is a rare. What disappoints me is the poor performance after price breaks out. It ranks 94 out of 103 candle types where 1 is best.

Rising Three Methods Important Results

Theoretical performance: Bullish continuation
Tested performance: Bullish continuation 74% of the time
Frequency rank: 88
Overall performance rank: 94
Best percentage meeting price target: 60% (bull market, up breakout)
Best average move in 10 days: -5.10% (bull market, down breakout)
Best 10-day performance rank: 7 (bull market, down breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal rising three methods candlestick
Rising Three Methods
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Rising Three Methods Discussion

The rising three methods is a complicated candlestick which results in few patterns found. I uncovered just 102 examples out of over 4.7 million candle lines. That means the statistics are likely to change, perhaps dramatically.

The rising three methods candle pattern acts in theory as it does in reality: bullish continuation 74% of the time. That is wonderful if you could find it in a historical price series but with a frequency rank of 88, the candle is quite rare. The best average move 10 days after the breakout is a respectable 5.10%, which ranks 7th for downward breakouts in a bull market.

Rising Three Methods Identification Guidelines

CharacteristicDiscussion
Number of candle linesFive.
Price trend leading to the patternUpward.
ConfigurationLook for a tall white candle followed by three small candles that trend lower but close within the high-low range of the first candle. Candles 2 and 4 are black, but day 3 can be any color. The final candle in the pattern is a tall white one that closes above the close of the first day.
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Three Trading Tidbits in Rising Three Methods

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. Trade this candle only when the primary trend is up -- page 638.
  2. Rising three methods candles with tall shadows on the last candle tend to outperform -- page 637.
  3. Volume gives performance clues -- page 637-638.

Rising Three Methods Example

The rising three methods candlestick on the daily scale

The chart of Airgas on the daily scale shows a very good example of a rising three methods candlestick pattern in its native habitat. Price trends upward leading to a tall white candle. Then three small black candles trend downward -- opposite the prevailing price movement -- and then a tall white candle closes out the pattern.

This rising three methods candlestick acts as a continuation of the bullish move up.

-- Thomas Bulkowski

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Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. There's no place like 127.0.0.1