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Tutorial on Three Outside Up Candlestick Pattern

What is Three Outside Up Candlestick Chart Pattern?

Three Outside Up Candlestick Chart Pattern is a bullish trend reversal pattern of strong reliability. It is formed at the downtrend or at a possible support. This pattern is a three day pattern or one can say it takes three days for this pattern to be formed. If see deeply into the pattern, its a further extension of Bullish Engulfing Candlestick pattern or its a confirmation for Bullish Engulfing Pattern.
Day 1: On first day, a smaller bearish candlestick (Open price is higher than the close price) is formed, which is formed in the continuation of a downtrend, as shown in the Figure.
Day 2: On second day, a larger bullish candlestick (open price lower than the close price) is formed which completely covers or engulfs the body of bearish candlestick formed on Day 1, as shown in the Figure.
Day 3: On third day again a bullish candlestick is formed which closes higher than the second day candlestick.

Three Outside Up Candlestick Pattern Sample

For this pattern to be formed it is extremely important:
a. It should formed in a downtrend.
b. The open price of the Day 2 candlestick is lower than the close price of Day 1 candlestick.
c. The close price of the Day 2 candlestick is higher than the open price of Day 1 candlestick.
d. The close price of the Day 3 candlestick is higher than the open price of Day 2 candlestick.
The strength of this pattern is increased by the size of the engulfing candlestick. The bigger the engulfing candlestick the more significant is the pattern. The first day the small bearish candle may looks like a continuation of downtrend but its small size shows that the bearish signal is weakening. This is confirmed by the long bullish candlestick formed the next day. The larger candlestick tells a lot more about the market sentiments that the bull is taking over the bear and hence there is an increase in price movement.

Three Outside Up Candlestick Chart Pattern by itself is a confirmed chart pattern but one has to see the overall market and other technical indicators for its strength and reliability.

On combining this pattern with any other technical indicators like Volume, Stochastic, RSI, MACD etc., further confirms this pattern and one can quickly pick up the trend change or the buy signal. For example evidence of higher volume on the second and third day further strengthen this pattern reliability. Similarly a price gap up the next day (Day 3) support further, this pattern of trend reversal.

Now we have learnt what is Three Outside Up Candlestick Chart Pattern, it is the time to see them in real life. Our website provides free Stock screening based on Three Outside Up Candlestick Pattern.
Corresponding Patterns of Three Outside Up Candlestick Chart Pattern is as follows:
1. Bullish Engulfing
2. Three Outside Down
Our website provides free Stock screening based on Different Bullish Candlestick Pattern. It can be found at below link:

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(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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