Three Inside Up
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 bullish harami. After a small bullish candle appears within a large bearish candle's body (harami), the third bullish candle breaks above the first candle's high to confirm the reversal. More reliable than a standalone harami, it serves as an effective buy signal at bottoms. This is a three-candle confirmation pattern extending the traditional harami.
Enter long at the next candle's open after the third bullish candle breaks above the first candle's high. Confirm the third candle's close clearly exceeds the first candle's open.
Project the first bearish candle's range upward from the third candle's close. Or target the nearest resistance line.
Place a stop-loss slightly below the first bearish candle's low (close). Or below the entire pattern's low.
Ideally, volume increases on the third candle. Volume exceeding the first large bearish candle on the third candle enhances reversal reliability.