Granthara04.04.02Rising and falling three methods

Every price in Part 04 comes from an unnamed vegetable market and is a teaching example. Nothing here is a quote, a recommendation, or a record of any listed company.

04.04.02 · Rising and falling three methods

PreviouslyThree candles in the same direction blend into one.

A pattern that exists at one resolution.

One big rising day, then three small sleepy ones that never leave its range, then another big rising day that finishes higher than the first. Five boards, a famous name — and if Lakshmi had been writing weekly boards instead of daily ones, nobody would ever have seen it.

Blend the five and nothing distinctive is left. The pattern was a property of where the day ended, not of the market.

Updated

5 → 1
boards, and an ordinary long candle where a famous pattern used to be
Part 04 · Continuation and Multi-Candle Formations
  1. 04.04.01 Three white soldiers, three black crows
  2. 04.04.02 Rising and falling three methods
  3. 04.04.03 Inside bars and outside bars
  4. 04.04.04 Marubozu and trend acceleration
  5. 04.04.05 Mat hold
  6. 04.04.06 Tasuki gap and separating lines
  7. 04.04.07 Three-line strike
  8. 04.04.08 Hikkake and modified Hikkake
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A rest, drawn

Rising three methods is five sessions. A long rising one. Then three small ones that stay inside its range and whose bodies are each no more than half of the first's. Then a second long rising one that closes above the first's close.

Read plainly, that is a move, a pause, and the move resuming. The three middle sessions did not take back what the first one gained — they did not leave its range at all. Falling three methods is the mirror.

The containment idea is 04.03.05's, applied to three sessions at once instead of one: the small boards sit inside the big one, in range rather than in body. That relationship is the next lesson, and this pattern is one of the places it turns up early.

See it

Blend the five

The same drag again. Watch what a famous five-candle pattern is left with.

First open ₹28, last close ₹31.40, highest ₹31.55, lowest ₹27.80. The three middle sessions leave no trace whatever.

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Where the three middle sessions went

This is the strangest result in Part 04, and it is worth sitting with. Blending the five gives an ordinary long rising candle — and not one of the four numbers comes from the middle three sessions.

The open is the first session's. The close is the last session's. The highest and the lowest both belong to the outer two as well, because the middle sessions never left the first one's range — which is precisely what the definition required of them.

So the pause is not merely diminished by blending. It is arithmetically invisible. Had the market been recorded on a slower clock, those three days would not have shown up as anything at all, and the five-candle pattern would simply not exist.

Some patterns are artefacts of the timeframe you chose. Blend a three-methods and the pattern disappears, because its middle is made of sessions the blend cannot see.

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What that does and does not prove

It does not prove the pattern is worthless. Three quiet days inside a big day's range is a real description of three real days, and noticing that a move paused without giving anything back is a reasonable thing to notice.

What it proves is narrower and more useful: the pattern is a fact about the resolution you are looking at, not about the market underneath it. 04.01.01 established that a period boundary is chosen rather than natural; this is the sharpest consequence of that anywhere in the Part.

It also gives you a question to ask of any multi-candle pattern you meet from here on. Would this still be here on a slower clock? Soldiers would — they blend into a marubozu. A morning star would — it blends into a hammer. A three-methods would not.

Where each of the blended numbers came from
Open ₹28
session 1
Close ₹31.40
session 5
Highest ₹31.55
session 5
Lowest ₹27.80
session 1
Contributed by sessions 2, 3 and 4
nothing
0of the four blended numbers from the pause
3sessions the blend cannot see
Try it

Blending a three-methods leaves an ordinary long candle. Blending three white soldiers leaves a marubozu. What distinguishes the two cases?

Try it

Would this pattern survive being blended onto a slower clock?

Three white soldiers
Rising three methods
A morning star
A tweezer bottom
Falling three methods

Lakshmi, asked about the three quiet days"They happened. If I wrote one board a week you would never know they had."

Containment has now turned up inside a continuation pattern, having already named two reversal ones. The next lesson stops working around it and measures it directly — with the other measuring stick.

Remember

A three-methods pause blends into a single candle with nothing distinctive left, because the definition requires its middle sessions to stay inside the first one's range and the blend therefore cannot see them — which makes the pattern a fact about the timeframe rather than about the market.

Everything this chapter has told you, in order

  1. 04.04.01Three candles in the same direction blend into one: a single move seen closer up.
  2. 04.04.02Some patterns are artefacts of the timeframe you chose.
Next
04.04.03 — Inside bars and outside bars

Next: containment for the fourth time, measured with the other stick.