Bearish sustaining pattern: three methods of declining

Behind a green and red candlestick, meaningful trading stories are often hidden.

Being able to properly understand the intrinsic logic of these candlestick will help us make trading decisions more easily.

This article will introduce a bearish sustained candlestick pattern - three methods of decline.

What is the Descent Three Method?

The three downtrend is a bearish sustained pattern that usually appears in a downtrend.

Typical falling three patterns consist of five candlestick: the first one is the big yin line; the middle three is the Xiaoyang line; the last one is also the big yin line.

In general, the entity of the intermediate K-line is limited to the trading range of the first bar, and the closing price of the last large yin line should be lower than the closing price of the first candlestick.

The three downtrend is a brief disruption of a downtrend and indicates that the downtrend will continue.

The three method of decline is the opposite candlestick pattern with the “three method of ascending”.

How is the Three Decline Formed?

To better understand the intrinsic logic of the descending three form, we can disassemble it into three parts.

• The first big yin line

The first part is a big yin line that highlights the obvious drop in prices in the intraday, which is in line with the current downtrend pace.

• Intermediate K-Wire Set

The second part is the middle K-line group, usually contains three Xiaoyang lines, appearing after the first big yin line, indicating some subtle changes in market sentiment, which may be due to partial short closing buy, so that the price gets some support.

• The Last Big Yin Line

The last part is also a big yin line, and is a key big yin line, with a close price lower than the closing price of the first big one.

This shows that the short force is working again and maintaining control of the market, so the next market may continue the previous downtrend.

How to Identify Descent Three Methods?

In actual combat, investors can pay attention to the following points to better identify the falling three patterns.

• Downtrend

The downward method should appear in a clear downtrend, otherwise it is not significant.

• The first K-line

The first candlestick of the drop method should be the big yin line, indicating that the price experienced a sharp decline within the day.

• Intermediate K-Wire Set

Intermediate candlestick usually consist of at least three Xiaoyang wires, the overall trend is opposite to the downtrend, and the entity of these small candlestick should not exceed the trading range of the first big yin line.

• The last K-line

The last candlestick should be the big yin line and the closing price is lower than the closing price of the first candlestick.

• Turnover

Trading volume in the middle candlestick tends to decline, as the bullish sentiment overall is weak during the short rebound of the price.

case analysis

Below, we take McMoran Copper Gold (FCX) stock price on the daily chart for example.

• Before the decline of the three forms, McMoran copper gold stock price was on a downward trend.

• The first day of the pattern, the stock price fell sharply; the next three days, the stock price rebounded slightly; the fifth day of the final form, the stock price fell again, and further lower.

• After the completion of the declining three-way pattern, the market's bearish sentiment re-ferments, and the stock price entered the downward trend again.

summed

The three downtrend is a bearish sustained candlestick pattern that usually appears in a downtrend.

This pattern helps investors identify the continuation of a downtrend and have the opportunity to profit from it.

In actual combat, investors should not use the candlestick pattern alone for trading decisions, combined with other technical analysis tools to determine market trends.