战雄电竞视频

The three inside up bullish reversal Japanese candlestick pattern loses $3.00 and $10.40 in the crypto and forex markets and makes $10.30 in the stock market on average per $100 risked.

But what if I told you there’s a way to trade this pattern across all markets profitably?

Would you be interested?

Keep reading if you want to learn how to make more money in the markets with this triple candlestick pattern.

What Is a Three Inside Up Candlestick Pattern?

The three inside up candlestick pattern is a bullish reversal pattern. The pattern is supposed to indicate the weakness of the current downtrend and signal a possible reversal in the trend. 

Identifying the bullish three inside up pattern and understanding the underlying price action gives traders an advantage over less informed traders. Let’s discuss identifying the three inside up pattern in our candlestick charts.

How to Identify Three Inside Up Candlestick Patterns

The following are the requirements for a valid three inside up pattern:

• The first candlestick in this pattern is bearish with a relatively long real body.
• The second candle must have a relatively small body engulfed by the first candle.
• The third bullish candle closes higher than the first candle’s opening price.
• The pattern must occur during a downtrend.

The three inside up candlestick pattern occurs within Apple’s chart on March 1st, 2021.

The first bearish candle of the pattern shows the bears are still in control. However, the second candlestick of the pattern is engulfed within the prior candle’s real body showing indecision and consolidation. The third and final candle completes this bullish reversal pattern and closes higher than the first candlestick.

This bullish close might attract buyers into the market, thereby signaling a potential reversal.

If you’re a stock trader, then it may work out in your favor; however, you’re likely to lose money in the forex and crypto markets – and there’s a much better way to trade this pattern anyways…

How to Trade the Three Inside Up Candlestick Pattern

Three inside up candlestick patterns should be traded using a bullish mean reversion strategy in all markets.

Let’s first cover the three inside up candlestick pattern traditional trading strategy.

Three Inside Up Bullish Reversal Trade Setup

The Danaher daily chart shows the three inside up pattern on 9 Apr. 2020. The price action is in a downtrend as it’s below the 50-day moving average. We see the first candlestick in the pattern is a large red candle.

The next candle shows some bullish action fully contained with the prior candle’s real body. Finally, the third candle closes above the first candle’s close completing the pattern.

Traditionally, traders enter the market with a long position once the price breaks the third candle’s high with a stop loss below the first candle’s low. 

In the example, this occurred on April 14th, 2020. The above example resulted in profits, which is typical for the stock market, but we can do better.

Three Inside Up Bullish Mean Reversion Trade Setup

The three inside up pattern appears yet again on the Amazon daily chart on March 1st, 2021. We see that price is in a downtrend below the fifty-day simple moving average. The first candle continues in the bearish direction. The next candle is fully engulfed by the first, with the third candle breaking bullish above the first candle’s open.

The bullish mean reversion trade setup waits for price to move below and then back above the pattern low with a stop loss of one ATR below the entry.

In our Amazon example, the entry occurred at $3,036.7 on March 3rd, 2021.

Does the Three Inside Up Candlestick Pattern Work? (Backtest Results)

Using the following rules, I backtested the three inside up candlestick pattern on the daily timeframe in the crypto, forex, and stock markets.

• A close above the 50-day SMA constitutes an uptrend.
• The ATR period is equal to the number of bars in the pattern.
• Confirmation must occur within three days of the pattern signal.
• I tested risk-reward ranges from 1 to 5.
• The optimal risk-reward ratio is selected using profit per bar.

We see that the three inside up candlestick pattern works in the stock market as advertised, but it works even better in all markets as a bullish mean reversion setup.

Three Inside Up Bullish Reversal Backtest Results

	crypto	forex	stock
pattern_name	three inside up	three inside up	three inside up
pattern_category	bullish reversal	bullish reversal	bullish reversal
pattern_bars	3	3	3
required_trend	downtrend	downtrend	downtrend
traded_as	bullish reversal	bullish reversal	bullish reversal
stop_bar_type	low	low	low
entry_bar_type	high	high	high
risk_reward	5	2	1
timeframe	2015-2021	2010-2021	2000-2021
bar_period	daily	daily	daily
total_tickers	395	1351	6949
pattern_tickers	70	507	4278
patterns	208	2113	41456
trades	142	1514	32378
confirm_perc	0.68	0.72	0.78
wins	23	451	17906
losses	119	1063	14472
win_perc	0.162	0.298	0.553
avg_win_bars	45.0	27.54	6.87
avg_loss_bars	14.03	14.56	7.51
cons_wins	2	5	12
cons_losses	4	10	8
edge	-0.03	-0.104	0.103

	crypto	forex	stock
pattern_name	three inside up	three inside up	three inside up
pattern_category	bullish reversal	bullish reversal	bullish reversal
pattern_bars	3	3	3
required_trend	downtrend	downtrend	downtrend
traded_as	bullish reversal	bullish reversal	bullish reversal
stop_bar_type	low	low	low
entry_bar_type	close	close	close
risk_reward	5	3	1
timeframe	2015-2021	2010-2021	2000-2021
bar_period	daily	daily	daily
total_tickers	395	1351	6949
pattern_tickers	70	507	4278
patterns	208	2103	41547
trades	191	2050	37461
confirm_perc	0.92	0.97	0.9
wins	28	480	21309
losses	163	1570	16152
win_perc	0.147	0.234	0.569
avg_win_bars	40.46	32.75	4.99
avg_loss_bars	10.56	15.26	6.06
cons_wins	2	5	11
cons_losses	6	10	7
edge	-0.115	-0.068	0.139

Three Inside Up Bearish Continuation Backtest Results

	crypto	forex	stock
pattern_name	three inside up	three inside up	three inside up
pattern_category	bullish reversal	bullish reversal	bullish reversal
pattern_bars	3	3	3
required_trend	downtrend	downtrend	downtrend
traded_as	bearish continuation	bearish continuation	bearish continuation
stop_bar_type	high	high	high
entry_bar_type	low	low	low
risk_reward	5	5	5
timeframe	2015-2021	2010-2021	2000-2021
bar_period	daily	daily	daily
total_tickers	395	1351	6949
pattern_tickers	70	507	4278
patterns	208	2135	42023
trades	103	627	19037
confirm_perc	0.5	0.29	0.45
wins	5	37	1765
losses	98	590	17272
win_perc	0.049	0.059	0.093
avg_win_bars	26.2	32.65	14.22
avg_loss_bars	3.58	3.44	2.74
cons_wins	2	1	5
cons_losses	4	5	17
edge	-0.705	-0.645	-0.445

	crypto	forex	stock
pattern_name	three inside up	three inside up	three inside up
pattern_category	bullish reversal	bullish reversal	bullish reversal
pattern_bars	3	3	3
required_trend	downtrend	downtrend	downtrend
traded_as	bearish continuation	bearish continuation	bearish continuation
stop_bar_type	high	high	high
entry_bar_type	close	close	close
risk_reward	4	5	5
timeframe	2015-2021	2010-2021	2000-2021
bar_period	daily	daily	daily
total_tickers	395	1351	6949
pattern_tickers	70	507	4278
patterns	210	2137	42354
trades	204	2112	38619
confirm_perc	0.97	0.99	0.91
wins	16	119	3468
losses	188	1993	35151
win_perc	0.078	0.056	0.09
avg_win_bars	2.0	3.61	1.44
avg_loss_bars	0.69	0.46	0.29
cons_wins	1	2	7
cons_losses	6	12	27
edge	-0.608	-0.66	-0.46

Three Inside Up Mean Reversion Backtest Results

	crypto	forex	stock
pattern_name	three inside up	three inside up	three inside up
pattern_category	bullish reversal	bullish reversal	bullish reversal
pattern_bars	3	3	3
required_trend	downtrend	downtrend	downtrend
traded_as	bearish mean reversion	bearish mean reversion	bearish mean reversion
stop_bar_type	atr	atr	atr
entry_bar_type	pattern_high	pattern_high	pattern_high
risk_reward	1	1	1
timeframe	2015-2021	2010-2021	2000-2021
bar_period	daily	daily	daily
total_tickers	395	1351	6949
pattern_tickers	70	507	4278
patterns	210	2137	42252
trades	45	495	6930
confirm_perc	0.21	0.23	0.16
wins	25	281	3473
losses	20	214	3457
win_perc	0.556	0.568	0.501
avg_win_bars	7.6	2.63	2.66
avg_loss_bars	2.0	3.73	2.9
cons_wins	2	4	6
cons_losses	3	3	8
edge	0.116	0.138	0.001

	crypto	forex	stock
pattern_name	three inside up	three inside up	three inside up
pattern_category	bullish reversal	bullish reversal	bullish reversal
pattern_bars	3	3	3
required_trend	downtrend	downtrend	downtrend
traded_as	bullish mean reversion	bullish mean reversion	bullish mean reversion
stop_bar_type	atr	atr	atr
entry_bar_type	pattern_low	pattern_low	pattern_low
risk_reward	1	1	1
timeframe	2015-2021	2010-2021	2000-2021
bar_period	daily	daily	daily
total_tickers	395	1351	6949
pattern_tickers	70	507	4278
patterns	211	2137	42345
trades	42	201	6575
confirm_perc	0.2	0.09	0.16
wins	27	143	3857
losses	15	58	2718
win_perc	0.643	0.711	0.587
avg_win_bars	2.52	0.93	1.78
avg_loss_bars	2.93	1.59	2.22
cons_wins	2	3	7
cons_losses	2	3	5
edge	0.283	0.421	0.177

The Bottom Line

The three inside up candlestick pattern signals a potential bullish reversal. The data shows us that this is true in the stock market but not so much in the crypto and forex markets. But even more pronounced is that this pattern signals incoming volatility in all markets. The best traders will use this pattern as a mean reversion opportunity or wait for volatility to contract and then break for a longer-term move.