Three Inside Up - Bullish Reversal Candlestick Pattern

Three Inside Up - Overview

The three inside up pattern is a bullish reversal signal. The first candlestick in the formation is a long black (red) candlestick that closes near its low. The second candle gaps away from the previous days close, and closes inside the body of the first candle, creating a harmai. The third candle then exceeds the high of the first and second candle, thus creating a three inside up pattern. This pattern is quite frequent in the morning as traders react to news driven events. This setup can be extremely profitable for skilled day traders who go counter to the primary trend.

Three Inside Up - Charting Example

The size of the third candlestick will often provide some indication to the strength of the reversal pattern. Also, if the third candlestick is able to stay above the low of the second candlestick, it provides more support to the bullish case. Traders should wait for the high of the third candlestick in the three inside up pattern to be broken prior to initiating long positions.

Three Inside Up