Pattern 3 Inside Down and 3 Inside Up

The terms 3 Inside Down and 3 Inside Up refer to a pair of reversal candlestick patterns (each containing three separate candles), which are displayed on candlestick charts. The pattern requires the formation of three candles in a specific sequence, indicating that the current trend has lost momentum and may be starting to move in the opposite direction.

Key Features:

• The 3 Inside Up pattern is a bullish reversal pattern consisting of a large downward candle, a smaller upward candle contained within the previous candle, followed by another upward candle that closes above the second candle's close.
• The 3 Inside Down pattern is a bearish reversal pattern consisting of a large upward candle, a smaller downward candle contained within the previous candle, followed by another downward candle that closes below the second candle's close.
• These patterns are short-term in nature and may not always lead to a significant or even minor trend change.
• Consider using these patterns in the context of the overall trend. For example, use 3 Inside Up during a pullback in an overall upward trend.

3 Inside Up

The upward version of the pattern is bullish, indicating that the downward price movement may be ending, and an upward movement is starting. Here are the characteristics of the pattern:

1. The market is in a downward trend or moving lower.
2. The first candle is a black (downward) candle with a large body.
3. The second candle is a white (upward) candle with a small body, which opens and closes within the body of the first candle.
4. The third candle is a white (upward) candle, which closes above the second candle's close.

3 Inside Down

The downward version of the pattern is bearish. It shows that the upward price movement is ending, and the price begins to move down. Here are the characteristics of the pattern:

1. The market is in an upward trend or moving higher.
2. The first candle is a white candle with a large body.
3. The second candle is a black candle with a small body, which opens and closes within the body of the first candle.
4. The third candle is a black candle, which closes below the second candle's close.

These patterns are essentially harami patterns followed by a confirming candle, which many traders wait for in the case of haramis.

See Also

Pattern 3 Outside Down and 3 Outside Up