The rising three method candlestick pattern is a bullish continuation pattern. This pattern indicates to traders that a bullish trend is continuing even after there is a temporary stop in trading. This pattern typically occurs after an uptrend and it ideally consists of five candles, but it must consist of more than three candlesticks.

In order to identify the rising three method pattern there are certain criteria that must be met. First, an uptrend must be in progress. Second, a long white candle forms on the first day. Third, a group of small real bodies, preferably black bodies, occur and follow a brief downtrend pattern. Ideally, this group of small real black bodies occurs on the second, third, and fourth days, again following a brief downtrend pattern, however they all stay within the trading range of the first day. Lastly, on the fifth day, a long white candle closes above the close of the first day. Remember that the close of any of the small real bodies should not close lower than the open of the first day’s long white candle.

What does this signal indicate is occurring in the markets?
The rising three method candlestick pattern indicates that there is a rest in the battle between the bulls and the bears. This rest is evident in the presence of the small real black bodies. The first black candle worries the bulls, and it does again the following day, but by the third day their tensions are eased. This is because on the fifth day the bulls come in strong to close at new highs realizing that the bears cannot push prices down any further.

Ideally the small real bodies that occur in this pattern are black however, they don’t have to be. These small real bodies can be a mixture of black and white candlesticks. As noted above, this pattern ideally consist of five candles, however it only must consist of more than three candles. The first and the last candlesticks must be white long bullish candles. This signal is highly reliable when all of the middle candlesticks are bearish (black).

Japanese Candlesticks are the fastest way for new investors to quickly and accurately read stock charts. Once you are comfortable with the major candlestick signals, and you have learned how to read stock charts continue to expand your expertise by learning the various secondary Candlestick Patterns. Combine these with your favorite technical analysis indicators, such as the moving average, and you have the perfect trading arsenal for evaluating stocks, currencies, commodities, or exchange traded funds.

Continue to learn about continuation patterns and read about the  falling three method candlestick pattern