Rising and falling three continuation candle construction

What a candlestick records

A candlestick is assembled from the session open, high, low, and close. A dark-body marks a close below the open and is read as net selling during that session. A light-body marks a close above the open and is read as net buying during that session. The shadows are the thin lines that mark the session high and low relative to the open-close range.

A pause inside the trend

Rising-three and falling-three constructions are continuation sequences. They describe a brief pause inside an existing trend rather than a reversal of that trend.

The three-methods pause is framed as market uncertainty that resolves when buyers cannot force a new low or sellers cannot force a new high. After that resolution, the original trend is treated as still intact.

Building a rising three

A rising three begins with a long light-body candle of the current uptrend. It continues with a group of smaller opposite-direction bodies that typically stay inside that first candle's high-low range. Those smaller middle bodies are the reaction-candles.

The sequence ends with a candle that closes beyond the first session's close in the original direction.

Building a falling three

A falling three is the same construction inverted. It starts with a long dark-body trend candle, continues with a group of smaller upward reaction-candles inside its range, and ends with a final dark-body candle that opens under the prior close and finishes at a new low.

How the reaction group can vary

The classic three-methods form uses five candles, but the middle reaction group may contain more than three small bodies. Those reaction-candles may extend outside the first candle's range.

If the small middle candles do not move mainly in one direction, the same stretch of price can be read as a mat-hold. A mat-hold is a bullish continuation form that allows more flexibility in those reaction candles.

What the names mark

The names rising three and falling three refer to the prevailing trend, not to the direction of the reaction-candles that interrupt it.