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Abandoned Baby
Advance Block
Belt Hold
Breakaway
Dark Cloud Cover
Deliberation
Doji Star
Dragonfly Doji
Downside Gap Three Methods
Downside Tasuki Gap
Engulfing
Evening Doji Star
Evening Star
Falling Three Methods
Gravestone Doji
Hanging Man
Harami
Harami Cross
Identical Three Crows
In Neck
Kicking
Meeting Lines
On Neck
Separating Lines
Shooting Star
Side By Side White Lines
Three Black Crows
Three Inside Down
Three Line Strike
Three Outside Down
Thrusting
Tri Star
Two Crows
Upside Gap Two Crows

Three Inside Down
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Pattern: reversal
Reliability: high

Identification
A bearish Harami pattern is followed by a black day whose close is lower than the second day.

The Psychology
In an uptrend or within a bounce of a downtrend, a bearish Harami forms. By itself this pattern has moderate reliability as a reversal pattern, but when followed by a weak day (preferably with a pick up in volume) the overall pattern becomes much more reliable.

The bearish Three Inside Down is a continuation of the bearish Harami.



DRD was in a steady uptrend, but the mid-September attempt at a higher high failed and resulted in a bearish Three Inside Down candle formation which reversed the uptrend.



SFD collapsed on huge volume in late June. The stock then experienced an oversold bounce which ended in a bearish Three Inside Down pattern.



Here is an example of when not to play a bearish Three Inside Down formation. LFG has just made a higher high on better than average volume. The candle pattern was just a pause in an uptrend...not a reason to go short.


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