As of 08/06/2020
  Indus: 27,387 +185.46 +0.7%  
  Trans: 10,331 +115.68 +1.1%  
  Utils: 829 +3.50 +0.4%  
  Nasdaq: 11,108 +109.67 +1.0%  
  S&P 500: 3,349 +21.39 +0.6%  
YTD
-4.0%  
-5.2%  
-5.7%  
 +23.8%  
 +3.7%  
  Targets    Overview: 07/31/2020  
  Up arrow28,150 or 25,000 by 08/15/2020
  Up arrow10,600 or 9,400 by 08/15/2020
  Up arrow870 or 800 by 08/15/2020
  Up arrow11,300 or 10,200 by 08/15/2020
  Up arrow3,355 or 3,100 by 08/15/2020
CPI (updated daily): Arrows on 6/29/20
As of 08/06/2020
  Indus: 27,387 +185.46 +0.7%  
  Trans: 10,331 +115.68 +1.1%  
  Utils: 829 +3.50 +0.4%  
  Nasdaq: 11,108 +109.67 +1.0%  
  S&P 500: 3,349 +21.39 +0.6%  
YTD
-4.0%  
-5.2%  
-5.7%  
 +23.8%  
 +3.7%  
  Targets    Overview: 07/31/2020  
  Up arrow28,150 or 25,000 by 08/15/2020
  Up arrow10,600 or 9,400 by 08/15/2020
  Up arrow870 or 800 by 08/15/2020
  Up arrow11,300 or 10,200 by 08/15/2020
  Up arrow3,355 or 3,100 by 08/15/2020
CPI (updated daily): Arrows on 6/29/20

Bulkowski on the Three Inside Up Candle Pattern

 

Three Inside Up Candlestick: Summary

The three inside up candlestick pattern is supposed to act as a bullish reversal and it does, quite often, too, -- not always, mind you, but quite often. The frequency rank is 31st out of 103 candle types, so this won't be as prevalent as hair on a gorilla, but you should be able to find the three inside up candlestick easily. Even better is the overall performance rank which is high. A check of the numbers shows that the three inside up candlestick works best after a downward breakout in a bear market.

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My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

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-- Tom Bulkowski

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Important Results
Discussion
Identification Guidelines
Three Trading Tidbits
Example
See Also

Three Inside Up Candlestick: Important Results

Theoretical performance: Bullish reversal
Tested performance: Bullish reversal 65% of the time
Frequency rank: 31
Overall performance rank: 20
Best percentage meeting price target: 60% (bull market, up breakout)
Best average move in 10 days: -7.00% (bear market, down breakout)
Best 10-day performance rank: 9 (bear market, down breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal three inside up candlestick
Three Inside Up

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Three Inside Up Candlestick: Discussion

The three inside up candlestick is a bullish harami with a confirming candle as the third day, according to Morris who created this candle pattern. In theory, it acts as a bullish reversal. In reality, it acts the same way, but only 65% of the time. I still consider that a respectable reversal rate. When coupled with a overall performance rank of 20, this candle pattern deserves a closer look.

The best average move 10 days after the breakout is a drop of 7% in a bear market, ranking 9th. Anything over 6% I consider a good move, so this candlestick pattern does very well.

Three Inside Up Candlestick: Identification Guidelines

CharacteristicDiscussion
Number of candle linesThree.
Price trend leading to the patternDownward.
ConfigurationLook for a tall black candle in a downward price trend. The next day, a small bodied white candle has a body that is within the body of the prior candle. The tops or bottoms of the bodies can be the same price, but not both. The last day is a white candle that closes above the prior close.

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Three Inside Up Candlestick: Three Trading Tidbits

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. Three inside up candles that appear within a third of the yearly low perform best -- page 750.
  2. Patterns within a third of the yearly high tend to act as reversals most often -- page 753.
  3. Trade the three inside up during a downward retracement of the primary uptrend -- page 752.

Three Inside Up Candlestick: Example

The three inside up candlestick on the daily scale

The chart shows a three inside up candle pattern circled in red. Price trends downward into the start of the pattern, a tall black candle. Following that, a white candle appears that fits inside the body of the prior candle. This completes the bullish harami candlestick. The final day of the pattern is the confirming candle, a white one that closes above the prior close, which it does. The combination suggests price has reversed trend.

An upward breakout occurs when price closes above the top of the candlestick. That happens in this example of the three inside up candlestick. Price enters the pattern trending downward and exits upward, so this three inside up acts as a reversal. However, look at how far price climbs. It forms a triple top before reversing and making a strong move down into March.

For the best performing setup, look for an upward price trend (the longer term trend). Then find a downward retrace of that uptrend followed by the three inside up candle. When price breaks out upward from that candle pattern it rejoins the uptrend already underway. Price often continues moving up after that.

-- Thomas Bulkowski

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See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

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