Triple candlestick patterns: three inside up and three inside down

Before reading this lesson, you should have previously read through:

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Three inside up pattern

The three inside up pattern is similar to the morning star triple candlestick pattern – it indicates a potential trend reversal found at the end of a downtrend.

The following chart shows an example of a three inside up pattern:

Three inside up

number_1 The first candlestick is long and bearish, indicating that the market is still in a downtrend.
number_2 The second candlestick is bullish and should ideally close at the halfway mark of the first candlestick.
number_3 The third candlestick is also bullish and closes beyond the open of the first candlestick, ideally above the high of the second candle.

Below, you can now test your knowledge on inside up patterns with an exercise we prepared for you.

Exercise: Find the three inside up pattern Show exercise

Three inside down pattern

The three inside down candlestick pattern is the opposite of the three inside up pattern and indicates a trend reversal found at the end of an uptrend.

The following chart shows an example of a three inside down pattern:

Three inside down

number_1 The first candlestick is long and bullish, indicating that the market is still in an uptrend.
number_2 The second candlestick is bearish and should ideally close at the halfway mark of the first candlestick.
number_3 The third candlestick is also bearish and closes beyond the open of the first candlestick, ideally below the low of the second candle.

Below, you can now test your knowledge on inside down patterns with an exercise we prepared for you.

Exercise: Find the three inside down pattern Show exercise

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Considerations using these patterns

A reversal pattern signal is stronger if it happens after a steep trend because the markets can rarely sustain a rapid price movement; a correction can usually be expected.

If the second candlestick does not reach the halfway point of the first candlestick, but the third still closes beyond the open or the low of the first candle, it may be considered as a valid three inside down pattern.

We have some more exercises for you to check if you remember everything from this lesson.

Exercise 1: Spot the triple candlestick patterns Show exercise

Summary

So far, you have learned that ...

  • ... the three inside up and three inside down are reversal patterns.
  • ... the first candle is long in the direction of the trend.
  • ... the second candle is shorter and closes up to the half way mark of the first candlestick, indicating there is a change in momentum.
  • ... the third candle closes beyond the open of the first candlestick.

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  • If the body of second candle will be bigger than body of first one, it can still be a vaild signal or not?
  • Hi Sepurta,
    with candlesticks there's always a lot of room for interpretation especially with lesser known ones like the above. I seen traders that would classify a pattern where "body of second candle will be bigger than body of first" as body engulfing candle pattern which again signals momentum shift. So to answer your question price action of a there inside up/down and body engulfing both represent a signal for a potential reversal but they are called differently.
    Hope that helps.
    Regards.
    Peter
  • very good but confusing indicators because they are many and similar in meaning and structure. Is there any system or method that tells which is weak and strong indicator. I want really to focus on the strong ones rather than the weak once.
  • Hi Mosses,
    What do you mean by indicator? The lesson is about candle stick patterns. Are you asking if there are more and less powerful candlestick patterns?
    Regards.
    Peter
  • Hej Peter,
    Sorry. Yes I am asking if there are powerful candlestick patterns.
  • mosses:
    Hej Peter,
    Sorry. Yes I am asking if there are powerful candlestick patterns.

    You cannot use any pattern, be it candlestick or other, for determining price direction with any reasonable accuracy. I assume you want a pattern to tell you where the market is going - This is impossible. The market is too complex and its movement depends on way too many things to be predictable.

    The more you trade the more you'll realize that. With more experience you're just gonna start understanding the market and have picture of where it can go and why.
  • I personally think hammers, dojis, engulfing patterns are the most looked for. Everything else is a modification of these. The main thing is you understand what candlesticks do. They either:
    break a level or reject it, either show strength or weakness. And base your actions on these.
  • Never tried the 3 candlestick pattern but will look forward to giving it a try
    Will let you know how it works out
    RegardsAnnton

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