Three Outside Candlestick Patterns

The three outside up and three outside down patterns are candlestick formations that indicate a potential trend reversal. These patterns consist of three consecutive candlesticks arranged in a specific order, suggesting a loss of momentum in the current trend.

Three Outside Up

• Price chart is in a downtrend
• The first candle is bearish or red
• The second candle is bullish with a long real body and fully contains the first candle (Bullish Engulfs)
• The third candle is bullish with a higher close than the second candle

Three Outside Down

• Price chart is in an uptrend
• The first candle is bullish or green
• The second candle is bearish with a long real body that fully contains the first candle (Bearish Engulfs)
• The third candle is bearish with a close lower than the second candle

Both three outside up and three outside down patterns are common indicators of potential trend reversals. While they can be effective entry signals, traders should consider confirming these patterns with additional technical analysis before executing trades.

We should be strictly planned for the Entry and Exit as well as STOP LOSS too to miinimize risk.