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Tutorial on Three Inside Down Candlestick Pattern


What is Three Inside Down Candlestick Chart Pattern?

Three Inside Down Candlestick Chart Pattern is a bearish trend reversal pattern of high reliability. It is formed at an uptrend or at a possible resistance. This pattern is a three day candlestick pattern or one can say it takes three days for this pattern to be formed. On closely observing this pattern, it is mere an confirmed extension of Bearish Harami Candlestick Pattern.

First Day: On day 1, a long bullish candlestick is formed, which is another candle in continuation of an uptrend. It has little significance by its own.
Second Day: On day 2, a small bearish candlestick is formed, which lies within the body of the candlestick body formed on day 1. This first two day candle forms bearish harami candlestick pattern.
Third Day: On day 3, a bearish candlestick is formed, which closes below the close price of the candlestick formed on day 2.This further confirmed the bearish harami pattern formed on Day 2 and, all the three candle together forms a Three Inside Down Pattern.

For this pattern to formed it is very important that:
a. There should be an uptrend before this pattern to occur.
b. The open price of the Day 2 candlestick is lower than the close price of Day 1candlestick.
c. The close price of the Day 2 candlestick is lower than the open price of Day 1 candlestick.
d. The close price of Day 3 candlestick should be lower than the close price of Day 2 candlestick.

Formation of bearish harami candlestick pattern itself speaks about the market sentiments that the bears are trying to take over the bulls. The third day formation of a bearish candle, further provides additional confirmation of bears rally is going to continue.

The size and location of the bearish candlestick formed on Day 2 will tell more about the magnitude of this pattern. The bigger bullish candle of Day 1 and a comparably small bearish candle of Day 2 represents strong trend reversal. Similarly if the bearish candle formed on Day 2 is located near the top of the bullish candlestick formed on Day 1 then one can say the downtrend may be slow, but if it lies in the mid or near the bottom side of the bullish candle one can say the reversal is moderate to strong. Further if the Day 3 candlestick is located below the low of the Day 2 candlestick and end lower than the close of Day 2 candlestick, it signify strong trend reversal.

Precautions to be taken while utilizing this Pattern.
1.It is important to reconfirm the pattern by integrating this pattern with the study of other technical indicators. Therefore adding any one of the other indicators like Volume, Stochastic, RSI, MACD etc. with chart patterns, one can further enhance the probability of the pattern to happen.

2.Like if this pattern is formed at the top of an uptrend together with oversold condition, then it further strengthen strong sell signal. If it is formed in a downtrend or in sideways it is of no significance.

Now we have learnt what is Three Inside Down Candlestick Chart Pattern, it is the time to see them in real life. Our website provides free Stock screening based on Three Inside Down. It can be found at this link

Corresponding Patterns of Three Inside Down Candlestick Chart Pattern is as follows:
1. Bearish Harami
2. Bearish Engulfing

Example of Three Inside Down Chart Pattern

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Our website provides free Stock screening based on Different Bearish Candlestick Pattern. It can be found at:

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Total Comments 1

User Comments
Posted by Santanu
Posted on: 10-Jan-2016
how to take entry based on this pattern ?


(All analysis is based on End of Trade day's Value. Expected time of update is between 5 to 5.30 PM exchange time Zone)

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