Three Inside Up & Three Inside Down

🔍 What is the Three Inside Up / Down Pattern?

The Three Inside Up and Three Inside Down are 3-candle reversal patterns that provide an early signal of trend reversal with confirmation.

👉 These patterns are based on the Harami pattern, followed by a third candle confirming the new trend direction.

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🟢 Three Inside Up (Bullish Reversal)

📈 Structure

1. 🔴 First candle → strong bearish candle in a downtrend
2. 🟢 Second candle → small bullish candle inside the first candle’s body
3. 🟢 Third candle → bullish confirmation candle closing higher

👉 Signals that buyers are slowly taking control.

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💡 Psychology Behind Three Inside Up

• Sellers dominate initially
• Market slows down (indecision phase)
• Buyers gain momentum and confirm reversal

👉 Indicates the downtrend may be ending.

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✅ How to Trade Three Inside Up

• Buy above the third candle’s high
• Stop loss below the pattern low
• Target nearby resistance levels

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🔴 Three Inside Down (Bearish Reversal)

📉 Structure

1. 🟢 First candle → strong bullish candle in an uptrend
2. 🔴 Second candle → small bearish candle inside the first candle’s body
3. 🔴 Third candle → bearish confirmation candle closing lower

👉 Signals sellers are beginning to dominate.

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💡 Psychology Behind Three Inside Down

• Buyers dominate initially
• Momentum weakens
• Sellers take control and confirm reversal

👉 Indicates the uptrend may be ending.

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✅ How to Trade Three Inside Down

• Sell below the third candle’s low
• Stop loss above the pattern high
• Use support zones as targets

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⚠️ Common Mistakes to Avoid

• ❌ Ignoring the confirmation candle
• ❌ Trading without trend context
• ❌ Using in low-volume sideways markets
• ❌ Confusing with engulfing patterns

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🔗 Three Inside vs Three Outside

Pattern	Base Pattern	Strength
Three Inside Up/Down	Harami	Moderate
Three Outside Up/Down	Engulfing	Stronger

👉 Three Outside patterns are generally stronger because of the engulfing candle.

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🚀 Pro Tips for Better Accuracy

• Combine with Support & Resistance Zones
• Use RSI divergence for confirmation
• Look for volume increase on 3rd candle
• Trade with overall trend direction

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The Three Inside Up and Three Inside Down patterns are reliable early reversal signals that help traders spot trend changes before major moves begin.

👉 Confirmation from the third candle makes these patterns more trustworthy than basic Harami setups