The Falling 3 candlestick pattern is a five candle bearish continuation pattern. Its bullish counterpart is the Rising 3 candle pattern.
While this candle pattern is reliable with a 71% accuracy rate, it’s incredibly hard to find on larger time frames. The Falling 3 pattern is so rare, in fact, that Bulkowski didn’t even include the pattern in his best selling book, Encyclopedia of Candlestick Charts.
So how does the Falling 3 candlestick pattern work?
The first candle is a full bodied bearish candle.
The next three candles are smaller bullish candles, although the middle candle can be bearish or bullish, and should create a staircase effect within the high/low range of the first bearish candle.
The fifth and final candle is another full bodied bearish candle that closes below the close of the first candle.