Three Outside Up Pattern
- It is a three candlestick pattern observed at the end of a bearish rally.
- This pattern is an extension of the two-line bullish engulfing pattern.
- This type of pattern indicates a trend reversal and a bullish rally is seen thereafter.
- The first candle is black.
- The second candle is white with a long real body and fully contains the first candle.
- The third candle is white with a higher close than the second candle.
- This indicates that the previous day bears were defeated and a bullish engulfing pattern is observed on the second day.
- The candle on the third day acts as a confirmation for the engulfing pattern. It closes above the closing price of the previous green candle and indicates trend reversal.
- The entry price would be the close price of the third candle and stop loss would be the low of the red candle formed on the first day.
Three Outside Down Pattern
- It is a three candlestick pattern observed at the end of a bullish rally.
- This pattern is an extension of the two-line bearish engulfing pattern.
- This type of pattern indicates a trend reversal and a bearish rally is seen thereafter.
- The first candle is white.
- The second candle is black with a long real body that fully contains the first candle.
- The third candle is black with a close lower than the second candle.
- This indicates that the previous day bulls were defeated and a bearish engulfing pattern is observed on the second day.
- The candle on the third day acts as a confirmation for the engulfing pattern. It closes below the closing price of the previous red candle and indicates trend reversal.
- The entry price would be the close price of the third candle and stop loss would be the high of the green candle formed on the first day.