Mastering Candlesticks: Falling Three

​What is it?

It is somewhat ironic this pattern is a five-candle pattern, even though we call it a Falling Three, but once you understand the pattern, it makes perfect sense. The first day closes with a large black candle. It is followed by three smaller candles which do not trade above or below the first candle. Finally, day five rounds out with another large black candle, which usually closes below the first candle.

​Where is it?

The Falling Three is a continuation pattern and will be found in the midst of a bearish swing that has already started. It signifies the current bearish move is going to continue with even more bearish potential.

What should I do when I see this pattern?

According to Thomas Bulkowski, this pattern continues the bearish trend around 71% of the time. So when you see a falling three, you can put an entry trigger just below the 5th candle and enter the bearish trade. It is a very strong continuation signal.