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Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions.
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Three Inside Up Candlestick: Summary
The three inside up candlestick pattern is supposed to act as a bullish reversal and it does, quite often, too, -- not always, mind you, but quite often. The frequency rank is 31st out of
103 candle types, so this won't be as prevalent as hair on a gorilla, but you should be able to find the three inside up candlestick easily. Even better is the overall performance rank which is high. A
check of the numbers shows that the three inside up candlestick works best after a downward breakout in a bear market.
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My book,
Encyclopedia of Candlestick Charts  ,
pictured on the left, takes an in-depth look at candlesticks, including performance statistics.
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Three Inside Up Candlestick: Important Results
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Theoretical performance: Bullish reversal
Tested performance: Bullish reversal 65% of the time
Frequency rank: 31
Overall performance rank: 20
Best percentage meeting price target: 60% (bull market, up breakout)
Best average move in 10 days: -7.00% (bear market, down breakout)
Best 10-day performance rank: 9 (bear market, down breakout)
All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.
The above numbers are based on hundreds of perfect trades. See the glossary for definitions.
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 Three Inside Up
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Three Inside Up Candlestick: Discussion
The three inside up candlestick is a bullish harami with a confirming candle as the third day, according to Morris who created this candle
pattern. In theory, it acts as a bullish reversal. In reality, it acts the same way, but only 65% of the time. I still consider that a respectable reversal rate. When coupled with
a overall performance rank of 20, this candle pattern deserves a closer look.
The best average move 10 days after the breakout is a drop of 7% in a bear market, ranking 9th. Anything over 6% I consider a good move, so this candlestick pattern does very well.
Three Inside Up Candlestick: Identification Guidelines
| Characteristic | Discussion |
| Number of candle lines | Three. |
| Price trend leading to the pattern | Downward. |
| Configuration | Look for a tall black candle in a downward price trend. The next day, a small bodied white candle has a body that is within the body of the prior candle.
The tops or bottoms of the bodies can be the same price, but not both. The last day is a white candle that closes above the prior close. |
Three Inside Up Candlestick: Three Trading Tidbits
If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book
where the tips appear.
- Three inside up candles that appear within a third of the yearly low perform best -- page 750.
- Patterns within a third of the yearly high tend to act as reversals most often -- page 753.
- Trade the three inside up during a downward retracement of the primary uptrend -- page 752.
Three Inside Up Candlestick: Example
The chart shows a three inside up candle pattern circled in red. Price trends downward into the start of the pattern, a tall black candle.
Following that, a white candle appears that fits inside the body of the prior candle. This completes the bullish harami candlestick. The final day of the pattern is the confirming
candle, a white one that closes above the prior close, which it does. The combination suggests price has reversed trend.
An upward breakout occurs when price closes above the top of the candlestick. That happens in this example of the three inside up candlestick. Price enters the pattern trending
downward and exits upward, so this three inside up acts as a reversal. However, look at how far price climbs. It forms a triple top before reversing and making a strong move down into March.
For the best performing setup, look for an upward price trend (the longer term trend). Then find a downward retrace of that uptrend followed by the three inside up candle. When price
breaks out upward from that candle pattern it rejoins the uptrend already underway. Price often continues moving up after that.
-- Thomas Bulkowski
Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions.
See Privacy/Disclaimer for more information.
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