Rising Three Methods / 上昇三法
Reference values based on Bulkowski's "Encyclopedia of Chart Patterns". Data is primarily from U.S. markets and may differ for other markets.
A reliable bullish continuation pattern based on the traditional Sakata methods. After a large bullish candle, three small bearish candles form within its range, followed by another large bullish candle that closes above the first candle's close. It indicates that the uptrend continues after a temporary correction (pullback).
Enter long at the next candle's open after the fifth large bullish candle confirms. Or enter when the fifth candle's close clearly exceeds the first candle's high. Confirm the fifth candle's volume is at least equal to the first.
First target: project the first bullish candle's range upward from the fifth candle's close. Or target the nearest resistance line. Second target: add the entire pattern range (fifth candle close minus middle candles' lowest low).
Place a stop-loss slightly below the lowest low of the three middle small candles. A tighter stop below the first bullish candle's open (low) is also possible. Skip the entry if risk-reward is not at least 1:2.
Ideally, high volume on the first bullish candle with a notable decrease during the three small bearish candles. Volume should increase again on the fifth bullish candle to at least equal the first. High volume on the middle bearish candles indicates strong selling pressure that may break the continuation pattern.