Rising/Falling Three Methods Pattern

Rising/Falling Three Methods is one of the commonly used candlestick patterns in quantitative trading, representing a bullish/bearish continuation pattern.

Calculation Principle

Rising/Falling Three Methods pattern is identified by the following conditions:

  1. First day: A long bullish/bearish candle
  2. Next three days: Small-bodied candles with an overall trend opposite to the first candle
  3. All three small candles' bodies are within the range of the first candle's body
  4. Last day: A long bullish/bearish candle with closing price exceeding the first day's close
  5. Last day's open is within the body range of the previous three candles

Parameter Description

  • Input Parameters:
    • Open: Opening price
    • High: Highest price
    • Low: Lowest price
    • Close: Closing price
  • Parameters:
    • penetration: Body penetration ratio (default: 0)

Usage Recommendations

  1. Use in combination with other technical indicators
  2. Pay attention to the overall market trend
  3. Monitor volume confirmation
  4. Set reasonable stop-loss levels
  5. Watch for false breakouts

Notes

  • Ensure data quality
  • Pay attention to pattern completeness
  • Consider market environment
  • Watch for false signals
  • Combine with fundamental analysis
  • Pay attention to risk control
  • Regularly evaluate strategy effectiveness
  • Optimize parameters
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