Three outward-pointing candlestick patterns: In the world of technical analysis, candlestick patterns serve as a valuable tool, giving traders insight into market psychology and potential price movements. Among the many patterns, Three Outside Up stands out for its reliability and importance.
This article examines the complexities of the Three Outside Up candlestick pattern and explores its formation, interpretation, and strategic implications.
3 Outer Up Candlestick Patterns – Definition
Three Outside Ups is a bullish candlestick pattern that usually indicates a strong bullish reversal in the security. This is a three candlestick pattern consisting of a red candle and two consecutive green candles.
Three Outer Up Candlestick Patterns – Formation
For the 3 candlestick pattern to be considered a 3 external upward candlestick pattern, several things must be met:
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The first candle should be a bearish candle (red candle) that was part of a previous downtrend.
The second candle should be bullish (green candle) and completely engulf the previous candle. This means that the opening price of the second candle must be lower than the closing price of the previous candle and it must close higher than the opening price of the previous candle.
The third candle should also be bullish (green candle) and it should close higher than the close price of the second green candle.