Three Inside Up Pattern


This is a reversal pattern which indicates a trend reversal which can be found at the end of a downtrend.

Setup – Leading into this pattern you are looking for a downtrend but there are no strict rules on how long the trend has to be in place.

1st Candle – The first candlestick is a bearish long bar which indicates that the market is trending down.

2nd Candle – The second is a bullish candle that ideally closes half way up the first candle but the tail can go beyond this.

3rd Candle – The last candle is also bullish that closes beyond the open of the first. It is preferable if it also closes higher than the top of the second candle.

Three Inside Up and down Pattern

What can Affect Probability and Performance of the Pattern?

One measure of the strength and longevity of the reversal can be found by looking at how steep the incoming trend is. This is due to the fact that it can be hard to sustain a rapid price movement which leads to a correction.

Although most rules generally hold, as long as the last candle still closes above or below the starting candle, the middle candle does not have to reach half way on the first candle.

Three Inside Down Pattern

This is a reversal pattern which indicates a trend reversal which can be found at the end of an uptrend.

Setup – Leading into this pattern you are looking for an uptrend but there are no strict rules on how long the trend has to be in place.

1st Candle – The first candlestick is a bullish long bar which indicates that the market is trending down.

2nd Candle – The second is a bearish candle that ideally closes half way down the first candle but the tail can go beyond this.

3rd Candle – The last candle is also bearish that closes beyond the open of the first. It is preferable if it also closes lower than the bottom of the second candle.