Lesson 40 of 69
Three Inside Up and Three Inside Down
8 min read
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This pattern starts with a harami: a large followed by a small candle whose entire body sits inside it. The harami alone only signals a loss of . The third candle is what turns it into a , which is why this pattern already contains its own .
Three Inside Up
Three Inside Up
Three Inside Up in context — interactive mini chart
- Pattern: Three Inside Up forms after the move into it
- Entry: Buy only once a candle closes above the pattern high
- Stop: Invalidation sits under the pattern low
Simulated price action for illustration — switch timeframes to see how the same pattern reads at different scales.
- Definition: a large candle, then a small candle contained within its body (bullish harami), then a bullish candle closing above the first candle's .
- Psychology: strong selling, then a period that could not make a new low, then buyers taking out the whole range of the sell candle.
- Where it forms: at after a decline, at the end of a pullback in an , and after a capitulation candle.
- What usually happens next: up to the previous . The 's low becomes the reference low the market defends.
Three Inside Down
Three Inside Down
Three Inside Down in context — interactive mini chart
- Pattern: Three Inside Down forms after the move into it
- Entry: Sell only once a candle closes below the pattern low
- Stop: Invalidation sits above the pattern high
Simulated price action for illustration — switch timeframes to see how the same pattern reads at different scales.
- Definition: a large bullish candle, then a small bearish candle inside its body (bearish harami), then a bearish candle closing below the first candle's open.
- Psychology: strong buying, then a period unable to make a new high, then sellers erasing the entire advance.
- Where it forms: at , at the top of a rally, and after an or news spike.
- What usually happens next: a decline toward the base of the bullish leg, with the inside candle's high acting as the level to defend.
vs confirmation
- The third candle is the confirmation — it must beyond the first candle's open, not merely inside it.
- : the third candle stays inside the first candle's range. You still have only a harami: reduced momentum, no reversal.
- Invalidation: a close beyond the first candle's extreme in the original direction. That extreme is your stop.
- Stronger when the harami candle is very small relative to the first — the tighter the pause, the sharper the resolution.
Why beginners like this one
Most candle patterns force you to wait an extra period before acting. Three Inside Up/Down already includes that wait, so the decision point and the invalidation are both defined the moment the third candle closes.
Key takeaways
- The pattern starts with a harami: a smaller candle inside the previous one.
- The inside candle shows momentum contracting.
- The third candle confirms the reversal by closing beyond the prior range.
- Without that third candle it is only a pause, not a signal.
Knowledge check
3 quick questions — your best score is saved to your progress.
1. Three inside up begins with…
2. What does the inside candle show?
3. What confirms three inside down?
Progress is saved on this device.
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