Basic Definitions:
The three rules of the rise are not a reversal pattern, but a continuation pattern, indicating that the previous upward trend will be consolidated after the three laws of the upside, and further higher will be a high probability event.
The upward rule of three patterns, usually the first day is a strong long white candle, followed by three small black candles (yin and yang are not important, the most important K-line body should be small) entities are included in the first day of the white candle, followed by a long white candle, the opening price of this long white candle is higher than the previous day's closing price, and the closing price of this long white candle has hit a new high in the previous 4 trading days, representing the market to regain momentum, and further higher in the future will be a high probability event. As shown below:
Technical points of the rule of three upwards:
First, the small candlesticks in the middle of the rule of three tend to be 3 to 5 candles, and most of the time 3 candles.
Second, the lowest point of the small candlestick in the middle of the pattern, it is better not to exceed the lowest point of the first long white candlestick.
Thirdly, the opening price of the last long white candlestick should be higher than the closing price of the previous long white candlestick, and the longer the last long white candlestick, the more effective the rule of three upwards will be.
The market meaning of the rule of three upwards:
The rule of three upwards is in the midst of an upward market, and the first long white candlestick continues the previous bullish market.
The smaller candlesticks are all within the price range of the first day, and together with the long white candlesticks at the top, they form a price pattern similar to the three-day pregnant candlestick pattern (in this pattern, the so-called price range of the first candlestick), which means that these small candlesticks are within the upper and lower shadows of the candlestick.
Several consecutive black candles cannot push the stock price below the opening price of the first candle, and then a long white candle and the first few small candles form a wrapping line, which means that the market has begun to rise.
Application of the Three Laws of the Upward Movement (i.e. the Buy Point)
On November 16, 2023, the price of gold stabilized during the previous correction and rebounded for 2 consecutive days.
After the rebound was formed, an obvious upward three-rule pattern was formed, especially after the close of the 5th K-line long white line, that is, the buying point appeared, and the price of gold went all the way up, and refreshed the record high of $2139 at that time.
In mid-December 2020, oil prices continued to rise, forming the rule of three upwards during the upward period, and after the formation of the pattern (i.e., the emergence of the buying point), the oil price went all the way up to the $68 line.