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Abandoned Baby
Belt Hold
Breakaway
Concealing Baby Swallow
Doji Star
Dragonfly Doji
Engulfing
Gravestone Doji
Hammer
Harami
Harami Cross
Homing Pigeon
Inverted Hammer
Kicking
Ladder Bottom
Mat Hold
Matching Low
Meeting Lines
Morning Doji Star
Morning Star
Piercing Line
Rising Three Methods
Separating Lines
Side by Side White Lines
Stick Sandwich
Three Inside Up
Three Line Strike
Three Outside Up
Three Stars In the South
Three While Soldiers
Tri Star
Unique Three River Bottom
Upside Gap Three Methods
Upside Tasuki Gap

Three Outside Up
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Pattern: reversal
Reliability: high

Identification
A bullish Engulfing pattern is followed by a white day whose close is higher than the second day.

The Psychology
In a downtrend or during a pullback within an uptrend, a bullish Engulfing pattern forms. By itself the pattern has moderate reliability as a reversal indicator, but when the it is followed by another white day (preferably on strong volume), the overall pattern becomes much more reliable.

The Three Outside Up may be a continuation of the bullish Engulfing.



Since bullish Engulfing patterns have decent reliability when played at support, Three Outside Up formations have high reliability when they form in the same situation. Here, FMXI rallied and then gave back about 50% of its gains. The stock then formed a bullish Engulfing pattern and followed it up with a another up day to complete the Three Outside Up pattern, and the stock proceeded to bounce over 30% in just one week.



Here is another example of the high reliability bullish Three Outside Up pattern forming at a level that was previously established as support. Note the volume surges.



TEVA was bouncing around in pretty volatile fashion when it formed a bullish Three Outside Up pattern which ended the consolidation period and began the next leg up for the stock.


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