How To Use Three Inside Up CandleStick In Trading

The Three Inside Up candlestick pattern is a bullish reversal pattern that appears after a downtrend.

It consists of three candles and signals a potential trend reversal to the upside. Here’s how it forms:

Formation of the Three Inside Up Pattern

1. First Candle: A large bearish (red) candle that continues the current downtrend.
2. Second Candle: A smaller bullish (green) candle that forms inside the body of the first candle, indicating a potential reversal.
3. Third Candle: A bullish candle that closes above the high of the first candle, confirming the reversal.

Key Features

• It suggests that the downtrend is losing momentum.
• The second candle being inside the first candle signals indecision.
• The third candle closing above the first candle’s high confirms the shift in market sentiment.

Trading Strategy

• Entry Point: Traders often enter a long position after the third bullish candle closes above the first candle’s high.
• Stop-Loss: Below the low of the second candle or first candle for risk management.
• Take-Profit: Depending on resistance levels, risk-reward ratio, or a trailing stop.

Reliability

• Stronger when found at key support levels.
• Higher volume on the third candle increases reliability.
• Can be used with other indicators like RSI or MACD for confirmation.

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