Rising Three Methods Bullish

Today we test the Rising three methods bullish pattern. This is part of a series of tests we are conducting to measure the efficacy of candlestick patterns.

This is the description as per the Lit Wick website:

Rising three methods pattern - How to Identify it

• The first day is a long white day
• The second, third, and fourth days have small real bodies and follow a brief downtrend pattern, but stay within the range of the first day
• The fifth day is a long white day that closes above the close of the first day

As always when the term “Long” is used in the description, we will define “long” as a range that is greater than the 20 day moving average of range. When we test the pattern in a uptrend, we define uptrend as a close greater than the 50 day moving average and yesterdays 50 day moving average is greater than the prior days 50 day moving average.

We tested this pattern on every one of the S&P 500 stocks since 1990 and compared the performance results to the average 5 day move in all the S&P 500 stocks. The entry was at the open on the day after the Rising three methods pattern setup and the exit was at the open 5 trading days after entry.

This is what the Rising three methods candlestick pattern looks like.


Below is a picture of the Rising three methods pattern that has 3 consecutive lows on days 2,3,4 in between the 2 white bars on the 1st and 5th days

Below are the results of the Rising three methods , rising three method with uptrend and Rising three method with three consecutive lows, all of these patterns are at the bottom of the table in bold. Also as a comparison the average 5 day holding period of all the S&P 500 stocks and all the other candlestick patterns that we have tested to date.


The rising three methods is a pretty lousy bullish setup, all of the variations I tested for this pattern made significantly less money than any random 5 day hold in the S&P 500 stocks.