Bearish Falling three methods: catching a temporary pullback in a downtrend

The Falling three methods is a five-candle continuation pattern that appears during a downtrend. A long bearish candle is followed by three small bullish candles that stay within its range, and then by another long bearish candle that closes below the first. The pattern describes a short rest in the decline, after which sellers resume control.

What does a Falling three methods look like?

The pattern forms over five consecutive candles:

• First candle: A long bearish (black or red) candle that continues the existing downtrend.
• Second, third, and fourth candles: Three small bullish (white or green) candles that drift slightly higher. They stay within the high-low range of the first candle.
• Fifth candle: A long bearish candle that closes below the close of the first candle.

The three small candles in the middle form a brief countertrend move. Because they do not break above the first candle's high, the downtrend is still considered intact.

What does the pattern tell you?

The first candle shows strong selling. The three small candles that follow show a pause: some sellers take profits and a few buyers step in, but the bounce is weak and stays inside the first candle's range. Buyers never gain enough strength to change the direction.

When the fifth candle falls below the first candle's close, it shows that sellers have returned with the same force as before. Many traders read the full pattern as a sign that the downtrend is likely to continue after the pause.

How reliable is the Falling three methods?

The Falling three methods is a less common pattern because it needs five candles to line up in a specific way. Traders usually look for extra evidence before acting on it:

• Prior trend: The pattern only has meaning within a clear downtrend.
• Containment: The three middle candles should stay inside the first candle's range. A small candle that breaks above the first candle's high weakens the pattern.
• Volume: Lower volume during the three small candles and higher volume on the two long bearish candles support the continuation signal.
• Confirmation: A lower close on the candle after the pattern adds weight to the signal.

How does the Falling three methods differ from the Rising three methods?

The two patterns are mirror images. The Rising three methods is a bullish continuation pattern in an uptrend: a long bullish candle, three small bearish candles that stay within its range, and a long bullish candle that closes above the first candle's close. Both patterns describe a pause that does not change the trend.

What are the limitations of the pattern?

Like any candlestick pattern, the Falling three methods describes what has happened, not what will happen. A downtrend can still end shortly after the pattern completes. Because the pattern requires five candles that match strict conditions, near-matches are common, and it can be tempting to treat a looser consolidation as the same signal. By the time the fifth candle closes, the price has also moved a long way, which affects where a stop-loss can be placed. Traders often set one above the high of the first candle to limit losses if the continuation fails.

How to find the Falling three methods on TradingView

TradingView can detect this pattern for you on any chart:

• Built-in indicator: Open Indicators and search for Falling three methods (bearish). The indicator marks each occurrence on the chart.
• All candlestick patterns at once: Add the All candlestick patterns indicator to see every supported pattern on one chart and choose which ones to display in its settings.
• Trend filter: In the indicator settings, choose how the prior trend is detected (based on SMA 50, or SMA 50 and SMA 200), or turn trend detection off.
• Alerts: Create an alert on the indicator to get notified when a new pattern forms.

Understanding the Falling three methods

The Falling three methods is a five-candle pattern made up of a long bearish candle, three small bullish candles within its range, and a long bearish candle that closes below the first. It signals that a downtrend may continue after a short pause. The pattern is uncommon, and traders usually confirm it with volume, the next candles, and other indicators before acting on it.