Three Inside Up Candlestick Pattern

The Three Inside Up is a bullish reversal candlestick pattern that signals a potential shift from a downtrend to an uptrend. It consists of three candles and appears at the bottom of a downtrend.

Structure of the Three Inside Up Pattern:

1. First Candle (Bearish):

• A long red (bearish) candle, confirming the ongoing downtrend.

• Shows strong selling pressure.

2. Second Candle (Bullish Inside Bar)

• A green (bullish) candle that forms within the first candle’s range.

• It closes higher than its open but does not exceed the first candle’s high.

• This indicates that buying pressure is increasing, but still within a consolidation phase.

3. Third Candle (Bullish Confirmation)

• Another green (bullish) candle that closes above the first candle’s high.

• This confirms the bullish reversal and signals buyers have taken control.

Key Characteristics:

✅ The second candle is entirely within the first candle’s body (inside bar).

✅ The third candle must close above the first candle’s high.

✅ Stronger when it appears at the bottom of a downtrend.

Psychology Behind the Pattern:

• The first bearish candle represents strong selling pressure.

• The second bullish inside bar suggests buyers are stepping in but with caution.

• The third bullish candle confirms the shift in momentum, encouraging more buyers.

Trading Strategy:

📌 Entry: After the third bullish candle closes above the first candle’s high.

📌 Stop-loss: Below the low of the second candle.

📌 Target: Next resistance level or based on a risk-reward ratio (e.g., 1:2).