Understanding the Falling and Rising Three Methods

Before we get into the nitty-gritty of the code, let’s understand what the Falling and Rising Three Methods patterns are. These patterns are used to identify potential reversals in the market. The Falling Three Methods is a bearish continuation pattern, while the Rising Three Methods is a bullish continuation pattern. Both are composed of five candlesticks and are essential for predicting market trends.

Coding the Indicator

To begin, we need to identify the largest candle over the past 25 bars. This is achieved using the following code:

// Determine the largest candle of the last 25 bars with RANGE
for i = 1 to 25 do
    DezeCandle = range[i]
    if DezeCandle > GrootsteCandle then
        GrootsteCandle = DezeCandle
    endif
next

This loop scans the last 25 bars and identifies the largest candle, storing its value in GrootsteCandle.

Falling Three Methods

Next, we define the conditions for the Falling Three Methods pattern:

// Determine Falling Three Methods
h4 = (close[4] < open[4]) and (open[4] - close[4]) > (GrootsteCandle * 0.3) // large red candle
h3 = (open[3] > close[4]) and (close[3] > close[4]) and (close[3] < open[4]) // body within large red candle
h2 = (open[2] > close[4]) and (close[2] > close[4]) and (close[2] < open[4])
h1 = (open[1] > close[4]) and (close[1] > close[4]) and (close[1] < open[4]) and (close[1] > close[3]) // rising small bodies
h0 = (close[0] < open[0]) and (close[0] < close[4]) and (open[0] - close[0]) > (GrootsteCandle * 0.30) // large red candle

if h0 and h1 and h2 and h3 and h4 then
    GrootsteCandle = 0 // reset largest candle
    drawrectangle(barindex[4], high[4], barindex[0], low[0]) coloured(255,211,155) style(line, 1) bordercolor(255,211,155) // orange rectangle
    drawtext("Falling 3 methods", barindex[4], (high[4] + 2 * pipsize), SansSerif, Bold, 16) coloured(255,0,255)
endif

This code snippet checks if the specified conditions for the Falling Three Methods are met and then highlights the pattern on the chart with an orange rectangle and text.

Rising Three Methods

Similarly, we define the conditions for the Rising Three Methods pattern:

// Determine Rising Three Methods
j4 = (close[4] > open[4]) and (close[4] - open[4]) > (GrootsteCandle * 0.3) // large green candle
j3 = (open[3] < close[4]) and (close[3] < close[4]) and (close[3] > open[4]) // body within large green candle
j2 = (open[2] < close[4]) and (close[2] < close[4]) and (close[2] > open[4])
j1 = (open[1] < close[4]) and (close[1] < close[4]) and (close[1] > open[4]) and (close[1] < close[3]) // falling small bodies
j0 = (close[0] > open[0]) and (close[0] > close[4]) and (close[0] - open[0]) > (GrootsteCandle * 0.30) // large green candle

if j0 and j1 and j2 and j3 and j4 then
    GrootsteCandle = 0 // reset largest candle
    drawrectangle(barindex[4], low[4], barindex[0], high[0]) coloured(189,252,201) style(line, 1) bordercolor(189,252,201) // green rectangle
    drawtext("Rising 3 methods", barindex[4], (low[4] - 2 * pipsize), SansSerif, Bold, 16) coloured(0,238,118)
endif

This code checks for the Rising Three Methods pattern and highlights it on the chart with a green rectangle and text.

Practical Application

Integrating these patterns into your trading strategy can provide you with significant insights into market trends. The Falling Three Methods pattern helps you identify potential downtrends, while the Rising Three Methods pattern signals possible uptrends. By incorporating these indicators, you can make more informed trading decisions and potentially increase your profitability.

Conclusion

Mastering the Falling and Rising Three Methods indicator in ProRealTime can be a game-changer for your trading strategy. By understanding and implementing these patterns, you can enhance your market analysis and make more informed decisions. So, get coding and start leveraging these powerful indicators today!

If you have any questions or need further assistance, feel free to reach out. Happy trading!

Complete code:

///Falling and Rising Three methods


//Grootste candle van de laatste 25 bars  bepalen met RANGE
for i= 1 to 25 do
DezeCandle= range[i]
if DezeCandle > GrootsteCandle then
GrootsteCandle=dezeCandle
endif
next


//bepalen Falling Three methods
////////////////////////////////////
h4 = (close[4] < open[4]) and (open[4] - close[4]) > (Grootstecandle * 0.3) // rode candle en body groot
h3 = ((open[3] > close[4]) and (close[3] > close[4]) and (close[3] < open[4])) //body valt binnen grote rode body candle
h2 = ((open[2] > close[4]) and (close[2] > close[4]) and (close[2] < open[4]))
h1 = ((open[1] > close[4]) and (close[1] > close[4]) and (close[1] < open[4]) and (close[1] > close[3])) // stijgende lijn in kleine bodies
h0= (close[0] < open[0]) and (close[0] < close[4]) and (open[0] - close[0]) > (Grootstecandle * 0.30) // rode candle en body groot


if h0 and h1 and h2 and h3 and h4 then
GrootsteCandle=0 //reset grootste candle {is meer dan 25 omdat deze blijft staan tot aan deze reset)
drawrectangle(barindex[4],high[4],barindex[0], low[0]) Coloured(255,211,155 )STYLE(line,1) bordercolor(255,211,155)  ////oranje
drawtext("    Falling 3 methods", barindex[4], (high[4]+ 2*pipsize),SansSerif,Bold,16)coloured(255,0,255)
endif

///Rising three methods/////////////////////////////////
//////////////////////////////////////////////////////

j4 = (close[4] > open[4]) and (close[4] - open[4]) > (Grootstecandle * 0.3) // groene candle en body groot
j3 = ((open[3] < close[4]) and (close[3] < close[4]) and (close[3] > open[4])) //body valt binnen grote groene body candle
j2 = ((open[2] < close[4]) and (close[2] < close[4]) and (close[2] > open[4]))
j1 = ((open[1] < close[4]) and (close[1] < close[4]) and (close[1] > open[4]) and (close[1] < close[3])) // dalende lijn in kleine bodies
j0= (close[0] > open[0]) and (close[0] > close[4]) and (close[0] - open[0]) > (Grootstecandle * 0.30) // groene candle en body groot


if j0 and j1 and j2 and j3 and j4   then
GrootsteCandle=0 //reset grootste candle {is meer dan 25 omdat deze blijft staan tot aan deze reset)
drawrectangle(barindex[4],low[4],barindex[0], high[0]) Coloured(189,252,201)STYLE(line,1) bordercolor(189,252,201)  ////groen
drawtext("   Rising 3 methods", barindex[4], (low[4]- 2*pipsize),SansSerif,Bold,16)coloured(0,238,118)
endif


 
return