A master candle is a rising or falling three method with more than three candles in the second phase.
So it will look like this.
This is exactly like the rising three methods but it has five candles in the second phase.
It can also have four candles or more than five.
In my experience this pattern works from three to nine candles in the second phase.
This is also reasonable: if the market stops for a few sessions,
we can suppose that it is a consolidation period.
If there are many sessions that express indecision, it may be that the power of the previous trend
is decreasing.
So we will use this pattern only if in the second phase there will be from three to nine candles, with
three candle
that is the case of a rising or falling three method. We call master candle the first candle that identifies
the trading range that you can see between the two
dashed lines in red.
We will also call the entire pattern master candle for the sake of simplicity.
Let's see some examples on the market.
Here we have euro-dollar on a 4-hour chart.
There's a clear uptrend before the formation of a master candle.
The second phase is highlighted in yellow and it counts nine candles. Last candle of the pattern breaks
high the high-low range of the first candle and the price continues to follow the uptrend.
Same situation on this 4-hour chart.
This time we have pound-dollar.
The second phase, highlighted in yellow,
is composed of four candles
this time. Last candle breaks high and conclude this continuation pattern.