The Three Inside Up candlestick chart pattern is a bullish three day trend reversal pattern. It is formed after a downtrend or at what becomes a major support level. The psychology of this three day candlestick pattern is that the Bulls overtake the Bears.
On day 1, a long bearish candlestick is formed, which is just a continuation of the downtrend.
On day 2, a small bullish candlestick is formed, which lies within the body of the day 1 candlestick.
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.
The size and location of the bullish candlestick formed on day 2 will tell more about the strength of this reversal 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 the trend reversal is weak. However, if day 2’s candle is located near the middle or top of the bearish day 1 candle, the trend reversal is strong. Furthermore, if the day 3 candlestick is located above the low of the day 2 candle and ends the day higher than the close of day 2’s candle, it is a strong trend reversal.<< Back to Glossary Index