Three Outside Up Pattern – Bullish

Three Outside Up is a three-candle bullish trend reversal pattern.

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

Above pattern is followed by a bullish candlestick pattern which closes higher than the body of the previous bullish candlestick pattern. It is a breakout pattern and known as a Bullish Three Outside Up pattern. It is a bullish trend reversal formation.

The pattern remains bullish as long as price is trading above the high price of the third candle of the pattern. More volume in the third & bullish candle in the pattern indicates that the breakout is strong. Three Outside Up pattern is basically a Bullish Engulfing pattern breakout in the next candle itself. This pattern is stronger than the Bullish Engulfing 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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