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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's Three Inside Up

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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 07/25/2017
21,613 100.26 0.5%
9,489 61.28 0.6%
716 -3.16 -0.4%
6,412 1.36 0.0%
2,477 7.22 0.3%
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4.9%
8.5%
19.1%
10.6%
Tom's Targets    Overview: 07/14/2017
21,850 or 21,000 by 08/01/2017
9,950 or 9,400 by 08/01/2017
740 or 685 by 08/01/2017
6,450 or 6,175 by 08/01/2017
2,525 or 2,400 by 08/01/2017

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.

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 ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

If you click on this link and then buy the book (or anything) at Amazon.com, the referral will help support this site. Thanks. -- Tom Bulkowski

 

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Three Inside Up Candlestick: Important Results

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.

The ideal three inside up candlestick
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

CharacteristicDiscussion
Number of candle linesThree.
Price trend leading to the patternDownward.
ConfigurationLook 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.
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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.

  1. Three inside up candles that appear within a third of the yearly low perform best -- page 750.
  2. Patterns within a third of the yearly high tend to act as reversals most often -- page 753.
  3. Trade the three inside up during a downward retracement of the primary uptrend -- page 752.

Three Inside Up Candlestick: Example

The three inside up candlestick on the daily scale

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

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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. See Privacy/Disclaimer for more information. The name is Baud...James Baud.