Three Inside Down
Reference values based on Bulkowski's "Encyclopedia of Chart Patterns". Data is primarily from U.S. markets and may differ for other markets.
A confirmation pattern for the bearish harami. After a small bearish candle appears within a large bullish candle's body (harami), the third bearish candle breaks below the first candle's low to confirm the reversal. More reliable than a standalone harami, it serves as an effective sell signal at tops. This is a three-candle confirmation pattern extending the traditional harami.
Enter short at the next candle's open after the third bearish candle breaks below the first candle's low. Confirm the third candle's close clearly falls below the first candle's open.
Project the first bullish candle's range downward from the third candle's close. Or target the nearest support line.
Place a stop-loss slightly above the first bullish candle's high (close). Or above the entire pattern's high.
Ideally, volume increases on the third candle. Volume exceeding the first large bullish candle on the third candle enhances reversal reliability.