Key Takeaways
Three Outside Up
Bullish engulfing pattern followed by a confirmation candle closing higher. One of the strongest reversal patterns.
Market Psychology
Engulfing shows bulls taking control, third candle confirms continued buying pressure.
Candle Structure
Trading Setup Example
Entry, stop loss, and take profit levels.
Always wait for pattern confirmation before entering a trade.
Where This Pattern Appears
Trend context and market position.
Advanced pattern requiring careful market analysis.
How to Identify
First candle: Bearish candle in downtrend
Second candle: Bullish engulfing the first
Third candle: Bullish, closes higher than second
Each candle shows progressive strength
Confirmation Signals
Trading Strategy
š„ Entry
Enter long at close of third candle
š Stop Loss
Place stop below pattern low
šÆ Take Profit
Target major resistance levels
āļø Risk/Reward
1:2.5
Common Mistakes to Avoid
Pro Tips
Best Timeframes
Pattern Variations
Educational Disclaimer
This content is for educational purposes only and does not constitute financial or investment advice. Trading involves significant risk and you may lose your capital. Always consult a licensed financial advisor before making investment decisions.
Frequently Asked Questions
Related Learning Resources
Related Patterns
Three Inside Up
Bullish harami followed by a confirmation candle closing above the first candle. Strong reversal confirmation.
Three Inside Down
Bearish harami followed by confirmation candle closing below the first candle. Strong bearish reversal confirmation.
Three Outside Down
Bearish engulfing followed by confirmation candle closing lower. One of the strongest bearish reversal patterns.