Falling Three Methods
BearishContinuationIntermediateA big red candle, a small bounce inside it, then the drop resumes.
Verdict: SkipBitcoin 4H: 7 trades, won 71%, avg trade +3.6% vs random day −0.2% (too few trades to judge). Backtest
Price is in a downtrend. Sellers are in control.
step 1/8
Trade rules
| Direction | Short (sell) |
|---|---|
| Entry | In a downtrend: a big red candle, 2 to 4 small candles inside its range closing higher, then a big red candle closing below the first one's close. Then a candle CLOSES below the pattern's low within 3 candles. |
| Cancelled if | A small candle leaves the first candle's range, or price trades above the pattern's high before the entry close. |
| Target | 2x the pattern, projected from the breakout |
3 common mistakes
- Counting bounces that break the first candle's high: that's a reversal, not a pause.
- Calling big candles in the middle a pause: they must be small next to the first one.
- Using it in an uptrend: it only signals continuation of an existing downtrend.
Backtest
same rules every time · equal size · no fees · method| Market | Trades | Won | Avg trade | Random day |
|---|---|---|---|---|
| Bitcoin · 4H · 2017-2026 · too few trades to judge | 7 | 71% | +3.62% | −0.24% |
| US large caps (50) · 1D · 2016-2026 | 21 | 38% | −2.92% | −1.21% |
Verdict: SkipLost money on average on US large caps. Bitcoin had too few signals to judge.
pattern −61%random −25%