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Tutorial on Three Inside Up Candlestick Pattern

What is Three Inside Up Candlestick Chart Pattern?

Three Inside Up Candlestick Chart Pattern is a bullish trend reversal pattern of high reliability. It is formed at a downtrend or at a possible support. 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 Bullish Harami Candlestick Pattern.

First Day: On day 1, a long bearish candlestick is formed, which is just the continuation of the downtrend. It has little significance by its own.
Second Day: On day 2, a small bullish candlestick is formed, which lies within the body of the candlestick body formed on day 1.
Third Day: On day 3, a bullish candlestick is formed, which closes above the open price of the candlestick formed on day 2, forming a new high.
For this pattern to formed it is very important that:
a. There should be a downtrend before the pattern to occur.
b. The open price of the Day 2 candlestick is lower than the close price of Day 1 candlestick.
b. 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 higher than the close price of Day 2 candlestick.

Three Inside Up candlestick pattern example sample Image

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

The size and location of the bullish candlestick formed on Day 2 will tell more about the magnitude of this pattern. The bigger bearish candle of Day 1 and a comparably small bullish candle of Day 2 represents strong trend reversal. Similarly if the Bullish candle formed on Day 2 is located near the bottom of the Bearish candlestick formed on Day 1 then one can say the uptrend may be slow, but if it lies in the mid or near the top side of the bearish candle one can say the reversal is moderate to strong. Further if the Day 3 candlestick is located above the low of the Day 2 candlestick and end higher 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 bottom of a downtrend together with overbought condition then it further strengthen strong buy signal. If it is formed in an uptrend or in sideways market it is of no significance.

Now we have learnt what is Three Inside Up Candlestick Pattern, it is the time to see them in real life. Our website provides free Three Inside Up Candlestick Chart Pattern. It can be found at this link
Corresponding Patterns of Three Inside Up Candlestick Pattern is as follows:
1. Bullish Harami           2. Bullish Engulfing

Example of Three Inside Up Chart Pattern: United Phosphorus Ltd

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Total Comments 2

User Comments
Posted by Shweta
Posted on: 11-Mar-2015
very useful

Posted by GANESH
Posted on: 19-Mar-2014
good presentation. Needs appreciation from all
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