Candlestick Pattern Encyclopedia

Continuation Patterns

Patterns That Say "Keep Going"

Not all patterns signal reversals. These patterns suggest the current trend will continue after a brief pause.

RISING THREE METHODS (Bullish Continuation)

                      ┌───┐
    ┌───┐             │███│
    │███│ ┌┐┌┐┌┐      │███│
    │███│ ││││││      │███│
    │███│ └┘└┘└┘      │███│
    │███│ small reds  │███│
    └───┘             └───┘
  Big green  pause   Big green continues
Requirements:
1. Big bullish candle
2. 2-4 small bearish candles (stay within first candle's range)
3. Big bullish candle that closes above the first

What it means: Bulls took a breather, then continued.
Signal: Strong bullish continuation.
Nickname: "The Rest Stop"

FALLING THREE METHODS (Bearish Continuation)

    ┌───┐ small greens ┌───┐
    │   │ ┌┐┌┐┌┐       │   │
    │   │ ││││││       │   │
    │   │ └┘└┘└┘       │   │
    │   │              │   │
    └───┘              └───┘
  Big red   pause    Big red continues
What it means: Bears took a breather, then continued selling.
Signal: Strong bearish continuation.

MAT HOLD

Similar to Rising/Falling Three Methods but:
- The small counter-trend candles can gap
- More flexibility in the number of small candles
- Often has a slight slope to the consolidation

Signal: Strong continuation pattern.

SEPARATING LINES

Bullish Separating Lines (in uptrend):
1. Bearish candle
2. Bullish candle that opens at same price as prior open

What it means: Sellers tried overnight, buyers immediately pushed back at open.
Signal: Uptrend continuation.

ON-NECK / IN-NECK / THRUSTING

These are WEAK continuation patterns in a downtrend:

On-Neck: Green candle closes at the prior low
In-Neck: Green candle closes slightly into prior body
Thrusting: Green candle closes up to midpoint of prior body

All suggest: "Buyers tried but couldn't do much - downtrend continues"

Note: If it closes ABOVE 50%, it becomes a Piercing Line (reversal)!

Continuation patterns work best when the trend is strong and the "pause" has low volume compared to the trend moves.

Key Takeaways

  • Rising Three Methods = big green, small reds inside, big green = bullish continuation
  • Falling Three Methods = big red, small greens inside, big red = bearish continuation
  • On-Neck/In-Neck/Thrusting are weak continuation signals
  • Continuation patterns show "the trend is just resting"