Three Inside Out Pattern – Bullish

Three Inside Out is a three-candle bullish trend reversal pattern.

A bearish candlestick pattern is followed by a bullish candlestick pattern that opens above the closing price and closes below the opening price of its previous candlestick pattern. In other words, the body of the second bullish candle stick pattern is within the body of its previous bearish candle stick pattern. It is an Inside candle, or the Bullish Harami pattern that we discussed earlier.

Above pattern is followed by a bullish candlestick pattern which closes higher than the body of the first bearish candlestick pattern. It is a breakout pattern and known as a Bullish Three Inside Out pattern. It is a bullish trend reversal formation.

The pattern remains bullish as long as price is trading above the low price of the third candle of the pattern. If there are evidence of the demand near the bottom price of the third candle, the bullish trades can be planned in case of price retracement to that level or the price consolidation.

Three Inside Out pattern is basically a Bullish Harami pattern breakout in the next candle itself. This pattern is stronger than the Bullish Harami pattern.

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This pattern can be plotted on the chart by adding it from the study menu in TradePoint & RZone. The pattern is also available in the system builder section. By combining this pattern with other patterns and indicators, you can create your own trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

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