Forex Trading

Three Inside Up Candlestick Pattern

closing price

The bulls are attempting to take over the bears, as evidenced by the formation of this candlestick pattern. The third day formation of a bullish candle, which formed a new high, adds to the evidence that the bullish rally will continue. All candlestick patterns have their unique shapes, telling us something about the market and the forces that made the pattern come about. And as traders, we’re very interested in knowing more about how the market performed certain moves, to improve our understanding of the market itself. Doing so we hope to find recurrent patterns that we could use to our advantage. As you can guess from their names, these are two opposite patterns, each of which consists of three identically colored candles.

close the price

  • The second candle forms inside the body of the previous candle, becoming a so-called inside bar.
  • The pattern is generally common, and therefore not always dependable.
  • This results in a negative gap, which is then followed by uncertainty, resulting in a candle that both opens and closes within the range of the previous candle.
  • The first is a bullish candle, and the other is a bearish candlestick pattern.

And it can reverse the ongoing downtrend to an uptrend. As the above chart image shows, the ongoing trend was a downtrend; at the bottom of the downtrend, a hammer candlestick appears, and then the trend changes from down to up. Bullish engulfing candles work smoothly in a downtrend.

Single candlestick patterns

On this candle, traders can enter for buying position. For the best performing setup, look for an upward price trend . Then find a downward retrace of that uptrend followed by the three inside up candle.


It is easy to spot, but as it is so prevalent, its reliability may be dampened a bit. It can be a false signal, but, as with all indicators, a wise trader is smart to require a confirmation from other sources. As you might have expected, there is also a bearish version of this candlestick grouping. It occurs when momentum slows in an uptrend or there is a brief pullback from a downtrend. While it may be tempting to rush straight to the markets and try to find and act on the three inside down pattern, its rarely a good idea.

Forex traders tend to see it as more of an alert than an absolute signal for a quick reaction. All traders need an edge in the volatile forex market, and this three inside up pattern can give you one. The bullish three inside up series occurs at the end of a strong downtrend.

The first candle is a tall green one, followed by a small red candle which must nestle within the range of the previous green body. The last candle is a tall red one that pushes below the close of the previous small red’s close. A trader could enter a short position close to the end of the day on the third candle or at the open the next day for a bearish three inside down. A stop-loss set above the third, second, or first candle’s high. For further confirmation, we have added stochastics, a preferred oscillator that gives off reliable signals when trends are present in the forex arena. In this case, the stochastics are confirming a go-long strategy for the euro.

quiz: Understanding trend lines

This candle at the top of an uptrend shows that bulls are getting weaker and unable to close the price higher. This pattern has a neckline, causing two candles to close at the same levels and form a horizontal neckline. When this pattern appears, traders can take buying positions after the completion of this pattern. As the above chart image shows, the ongoing trend was a downtrend, and a bullish engulfing pattern appeared, and then the trend changed from down to up.

Crude Oil Rises Over 2%; Consolidated Communications Shares Plummet – Aptinyx (NASDAQ:APTX), Bioventus (N – Benzinga

Crude Oil Rises Over 2%; Consolidated Communications Shares Plummet – Aptinyx (NASDAQ:APTX), Bioventus (N.

Posted: Tue, 28 Feb 2023 17:01:58 GMT [source]

This consists of three candlesticks, which don’t have shadows or wicks. Three white soldiers’ patterns form when three bullish candles with no wicks are open below the previous candle’s closing and still close above the last candle’s high/ closing. Three white soldiers indicate that bulls are back in the market. Bullish Candlestick patterns are those that indicate up trending market. That’s why we can also call them bullish reversal patterns. A candlestick pattern is formed by combining two or more candles.

This pattern indicates that the downtrend is possibly over and that a new uptrend has started. The Three White Soldiers pattern is formed when three long bullish candles follow a DOWNTREND, signaling a reversal has occurred. And other three candlestick patterns are continuation patterns, which signal a pause and then thecontinuation of the current trend. There are several different ways to trade the three inside up pattern. One way is to enter a position immediately when you identify the pattern and the third is completed.

Example of Three Inside Up Candlestick

Let’s see an example of the three inside up chart pattern. The first candle in this pattern indicates a continuation of an ongoing downtrend. But the next bullish candle’s low suggests strong support at the first bearish candle closing, which signals that the downtrend could change to an uptrend. Traders trading these candlestick patterns are advised to confirm their trades from other technical indicators and volumes. It is better if the third candle breaches strong support or resistance line.

This article will answer you what a Three Inside Up candle pattern is. As well as its characteristics, meaning, and how to trade using this pattern. When trading the three inside up pattern, place your stop loss below the low of the second candle. The stop loss will help minimize losses if the trading setup does not pan out. The Three Inside Up pattern should be confirmed, although it is an extension of the confirmed Bullish Harami pattern. Confirmation can be in the form of breaking the nearest support zone or a trendline.


An interesting example, presenting a close relationship between three patterns. The Three Inside Up always contains the Bullish Harami pattern formed by two first lines. Here, additionally, we can notice a Takuri Line pattern, which is the second line of a Bullish Harami pattern. The Three Inside Up candlestick is considered a powerful indicator for several reasons. The second candle is a small bullish candle, which trades within the range of the first candle. Conversely, the Three Inside Down candlestick formation is found at the top of an UPTREND.

Trading the Triple Candlestick Pattern

The Bullish Counterattack only works in a strong downtrend. And this pattern indicates the downtrend will reverse, and a new uptrend will begin soon. The three inside down pattern consists of three candlesticks arranged in a typical manner. As we have found that the success rate is not very high historically, the traders should not only trade in these patterns alone. The pattern should form at or near the top of the bullish trend. The first two candles in this variant have formed a Dark Cloud Cover pattern.

3 Reasons The 2023 Stock Market Rally May Be ‘Another Bull Trap’ – SPDR S&P 500 (ARCA:SPY) – Benzinga

3 Reasons The 2023 Stock Market Rally May Be ‘Another Bull Trap’ – SPDR S&P 500 (ARCA:SPY).

Posted: Fri, 17 Feb 2023 08:00:00 GMT [source]

But it must be noted that bears do not give up easily. At the slightest chance, bears may return anytime in future. Therefore it is necessary to get confirmation from other indicates to be assured of the current trend and its strength.

It is going to depend on how big risk you are willing to bear. When trading options, keep the position open at least three times as long as the timeframe of the chart you are using. Three Inside Up and Three inside Down are dependable reversal patterns also comprising a trio of consecutive candles. As a result, selling pressure increases even more and drives the market in the direction of its new bearish trend. In this strategy, when the SMA30 points down, the market is in a downtrend.

This pattern is considered a strong signal that the market is about to reverse its trend. Let’s look at some examples below of the pattern on charts. A three inside up pattern consists of four candlesticks that form near support levels. The 1st candle is bearish, the 2nd is a spinning top or doji that forms a bullish harami, and the other 2 candles form higher highs. Typically, the 4th candle forms a bullish reversal pattern.

At that time, the entry signal is when the Three Inside Down candles appear. The Three Outside Up and Down are another set of trend-reversal patterns, consisting of three candlesticks, with the Up being the bullish and the Down the bearish one. The Three White Soldiers pattern comprises three consecutive bullish candles of similar size which form after a downtrend.

  • This candle at the top of an uptrend shows that bulls are getting weaker and unable to close the price higher.
  • We recommend that you use backtesting to determine where the pattern works.
  • These candlestick formations help traders determine how the price is likely to behave next.
  • I will explain all 35 candlestick patterns as per these three types, so let’s begin.
  • Unfortunately, most technical analysis doesn’t work as shown in the textbooks, and will lead to nothing but losses if traded live.

It forms a triple top before reversing and making a strong move down into March. The three inside up candlestick pattern is supposed to act as a bullish reversal and it does, quite often, too, — not always, mind you, but quite often. The frequency rank is 31st out of 103 candle types, so this won’t be as prevalent as hair on a gorilla, but you should be able to find the three inside up candlestick easily. Even better is the overall performance rank which is high.

The three inside up pattern is formed at the bottom of a bear trend. This red candle takes the price further down indicating that the bears are still in control. The second candlestick shows that after all the fight between bulls and bears, the bulls own and took control of the condition.

Trading with the three inside patterns on IQ Option

The Three Inside Up candlestick formation is a trend-reversal pattern that is found at the bottom of a DOWNTREND. Another trading strategy to use in combination with the three inside up pattern is adding Fibonacci retracement levels. As a fan of Fibonacci levels, I would recommend adding these levels at all times, especially when you can find the market price between the highs and lows of previous market trends. The falling window candlestick pattern indicates a continuation of the downtrend. The rising window candlestick pattern indicates a continuation of the uptrend. Doji candlestick shows indecisiveness among buyers and sellers.

In addition to this, we’ll have a look at a few strategies that are built around the three inside down. The accuracy of this candlestick pattern is proportional to the size of the candlesticks in the pattern. The pattern of which the first 2 candles forming a Dark Cloud Cover candlestick pattern.

This pattern signals interruption but does not affect the ongoing uptrend. As the above chart image shows, the ongoing trend was uptrend, and then at the top of the uptrend, a dark cloud cover pattern appeared, and then the trend changed from up to down. If these candles are formed in an ongoing uptrend, the trend will change from down to up. The first red candle shows a continuation of the downtrend, and the second candle represents bulls returning in the market.

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