Three Outside Up: Powerful Bullish Reversal with Confirmation
Three-Candle Reversal Pattern: Day 1: Small bearish candle at downtrend bottom. Day 2: Large bullish candle engulfs Day 1 completely. Day 3: Another bullish candle closes higher than Day 2
Pattern Psychology Bears dominate Day 1. Bulls seize control Day 2, overwhelming sellers. Day 3 confirms buyers' sustained strength, no pullback. Triple confirmation makes this extremely reliable reversal signal
Engulfing Plus Confirmation Combines Bullish Engulfing (Days 1-2) with continuation candle (Day 3). Third candle validates reversal isn't false breakout. Significantly more reliable than standalone engulfing pattern alone
Trading Strategy Enter long at close of Day 3 or opening of Day 4. Place stop-loss below Day 1 low. Target 2-3x risk-reward ratio. Higher Day 3 close = stronger momentum.
Boost Accuracy Best at major support levels, oversold RSI (<30), or after prolonged downtrends (20+ days). Volume surge on Days 2-3 increases reliability to 75-85%. Avoid in choppy sideways markets