Three inside down

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    The three inside down pattern indicates a potential bearish reversal pattern and is generally found at the end of an uptrend.

    A valid three inside down pattern has the following properties:

    1. The first candlestick (1) is long and bullish, indicating that the market is still in an uptrend.
    2. The second candlestick (2) is bearish and should ideally close at the halfway mark or below of the first candlestick.
    3. The third candlestick (3) is also bearish and must close at least over the open of the first candlestick. Ideally, it should close below the low.

     

    Further reading

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    Learn more about trading using Japanese candlesticks: