When dealing with candlestick chart patterns you will find that some candlestick chart patterns are easily identified with strong signals while few patterns are rarely formed.
It is obvious to learn and trade with those which occur frequently and have strong reversal signals
3 inside up Candlestick chart pattern comes under such scenario.
It is most widely found chart pattern and has strong bullish trend reversal signal. We will identify its appearance, characteristics and how to trade with this.
Find some more Bullish trend reversal candlestick pattern
Physical appearance of 3 inside up Candlestick pattern
As the name suggests 3 inside up Candlestick pattern is formed with a combination of three candlesticks after a downtrend.
The three candlestick comprises of one bearish and two bullish candlesticks
Each has its own significance
- The first candlestick should be long bearish candlestick formed after a downtrend.
- The second candlestick should be bullish and the close should be above the mid price value of bearish candlestick.
- The third candlestick formation should be bullish and should close above the high of the first bearish candlestick
This formation confirms the formation of the pattern with a strong signal of an uptrend in the market.
Condition of use
The only condition here is that the pattern must get formed after a proper downtrend. The downtrend is trying to form a bottom and along with this if 3 inside up bottom formation give the trader a strong signal to enter the market.
The market interpretation of bullish reversal starts with the formation of the second candle which closes above the midway of the bearish candlestick.
Here it says that the buyers are active and optimistic and willing to buy the sell orders by the sellers.
With the third candle formation with a close above the high of the bearish candlestick, confirms the pattern signal.
The buyers are active and are willing to pay any amount for the selling orders and they find it a suitable bottom condition of a trend.
The fight between buyers and sellers where sellers were dominating the market are now exhausted and the buyers are now driving the market in their direction,
The optimistic nature of buyers can be seen here. The signal needs to be verified and patiently wait to get the ultimate profit from the uptrend.
Explore its examples
Key elements to remember
- 3 candlestick formation calls for 3 inside up pattern
- The second candle should close above mid way first candle
- Third bullish candles should close above the high of first candle
- Forms after a proper strong down trend
- Sellers become weak and Buyers are optimistic now
You can now with 3 inside up down candlestick pattern decide the entry timing in the market. Make sure you find downtrend before this pattern otherwise it won’t be considered as 3 inside up chart and you will get misled with so many signals.
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