the hAnDbook of technIcAl AnAlysIsDescription:■ (^) The rising three method is a multiple candlestick continuation pattern. See
Figure 14.38.
■ (^) The second bullish candlestick gaps down below the low of the first bearish
candlestick and subsequently reverses back up to at least midway or more of
the first candlestick.
■ (^) The longer the first and last candlesticks, the more bullish will be the formation.
■ (^) It is best found in an uptrend that is beginning to display strength.
Psychology:
■ (^) The rising three method depicts bulls driving prices higher aggressively. Price
subsequently declines as the bears try to take control. The buyers eventually
resume control and drive prices back up to above the high of the first candle-
stick. This clearly puts the bulls back in control.
Trigger, Stoploss, and Confirmation:
■ (^) The trigger is at the high of the first candlestick.
■ (^) To confirm the continuation, price needs to close above this trigger level.
■ (^) The stoploss is placed at the low of the formation or last penetration candlestick.
See Figure 14.39.
figure 14.39 Rising Three Method on the Daily Chart of SunOpta Inc.
Courtesy of Stockcharts.com