Candlestick chart patterns

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Bearish Counter-Attack Lines
Bearish Engulfing Pattern
Bearish Harami
Bearish Hikkake Pattern
Bearish Multi-Harami Pattern
Bearish Separating Lines
Bearish Star
Belt hold line (Marubozu)
Belt-Hold line-Yorikiri-Bearish Pattern
Belt-Hold line-Yorikiri-Bullish Pattern
Bullish Counter-Attack Lines
Bullish Engulfing Pattern
Bullish Harami
Bullish Hikkake Pattern
Bullish Kicker Candlestick Pattern
Bullish Multi-Harami Pattern
Bullish Separating Lines
Bullish Star Pattern
Butterfly Doji
Channels
Coiling Inside Bar
Cup and Handle
Dark Cloud Cover Pattern
Doji Pattern
Doji Star Candlestick Pattern
Double Inside Bar
Downward Gap Tasuki
Flags and Pennants
Gravestone Doji
Hammer & Hanging man Pattern
Head and Shoulders and Inverted Head and Shoulders
Inverted Hammer & Shooting Star Pattern
Ladder Bottom
Ladder Top
Long-legged Doji
Mat-Hold Pattern
Mega Bearish Engulfing
Mega Bullish Engulfing
Multi Inside Bar
Negative Bias Candle
Piercing Pattern
Positive Bias Candle
Raindrop
Rickshaw-man Doji
Rounding Bottom
Side-by-side Green lines - Bearish
Side-by-side Green lines - Bullish
The Evening Star
The Falling Three Pattern
The Morning Star
The Rising Three
Three Advancing Soldiers
Three Black Crows Pattern
Three Inside Out Pattern - Bearish
Three Inside Out Pattern - Bullish
Three Line Strike Pattern - Bearish
Three Line Strike Pattern - Bullish
Three Outside Up Pattern - Bearish
Three Outside Up Pattern - Bullish
Three River Bottom Pattern
Trend Angles: 45 Degree Trendline
Trendlines
Triangles
Upside Gap Two Crows
Upward Gap Tasuki
Wedges: Rising and Falling Wedges
Windows

The Falling Three Pattern

The Falling Three is a multi-candle strong bearish continuation pattern. Imagine a strong bearish candle that appears in the downtrend.

The body of the next candle remains within the range of the previous bearish candle. It is not necessarily a Harami pattern, the body should be within the range of the previous candle, not necessarily within the body. It indicates the possibility of the price consolidation trend. The colour of second candle is not very important.

There is another candle having body within the range of the first bearish candlestick. Body of both the candles within the range of the first bearish candle indicates that consolidation in the downtrend has begun. Some bears might start worrying and exiting the short positions. Traders looking for bottom start buying.

Next candle turns out to be strong bearish candlestick that triggers the bearish continuation consolidation breakout pattern. It opens below the closing price of previous session and closes below the closing price of first bearish candle stick pattern. It tells us that the bears are back in action and the important supports are broken. This formation is known as a The Falling Three pattern.

The Falling Three pattern is a small consolidation breakout pattern that offers a very affordable risk-reward bearish trade opportunity.

The candles of consolidation can be 2, 3 or even multiple candles but remember, they must be withing the range of the first bearish candlestick pattern to qualify for the Falling Three formation. Hence, it can be a four or five candle pattern.

Click here to learn more about the pattern.

This pattern can be plotted on the chart by adding it from the Add study menu in TradePoint & Patterns in RZone. The pattern is also available in the System Builder section. By combining this pattern with other patterns and indicators, you can create your own trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

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