Online Share Trading

What is Three Inside Down candlestick Pattern?

Multiple candlestick patterns can be very useful tools to help predict asset price movements. The three-inside down candlestick pattern is an excellent technical indicator for identifying trend reversals. This pattern is used by traders to chart out counter-trend trading strategies. It can be used for both short-term and intraday trades. Let's look more closely at the candlestick pattern.

Three inside down candlestick patterns are the - An overview

The three inside down pattern is similar to the three outside patterns. It also includes three consecutive candlesticks. This pattern is most likely to be seen during a bullish trend. This pattern shows a bullish candle that is long, followed by two smaller bearish candles. This pattern forms at the top end of an uptrend, which indicates that the trend will likely reverse and the asset's price will fall.

Three inside down candlestick patterns are examples of

It is very easy to spot the three inside down patterns in a candlestick diagram.

This figure shows that the asset's price is trending strongly in the upward direction. This clearly shows the strong hold of the bulls in market. The trend continues as the positive close to the first candle of the three inside-down candlestick patterns is observed. The candle's body is long with bulls dominating, which indicates that the trend will continue.

However, the second candle of the pattern opens with a "gap down". The sudden, unexpected downmove during a strong uptrend throws the bulls off track and causes them to be nervous. The gap down opening encourages the bears to make an aggressive entry and take control of session. The session ends with both the closing price and the opening price for the second candle being higher than those of the first candle. A long bullish candle is followed by a shorter bearish candle. This pattern resembles a bearish-harami candlestick.

The buying interest has slowed to a halt, and the bears are in control. The selling pressure increases in the third session and the bears continue their sell-off. The third and final candle of the pattern ends in red due to this. This is a crucial point to remember. To ensure that the inside down candlestick is successful, the third bearish candle must close below the second long bearish candle and first long bullish candle. The confirmation of the bearish trend's reversal is shown by the strong down movement in the third session.

How to use three inside-down pattern ?

It is important to be able to effectively use the indicator before entering into trades based on the three-inside down candlestick pattern. These are some things to remember.

First, watch out for a strong bullish trend on the candlestack charts.

Look out for a bullish candle once the bullish trend has been identified. This candle would be the final one in the three-inside down patterns.

After spotting the bullish candle long, look for a bearish candle short on the charts. The second candle should be shorter and contained within the first bullish candle. The pattern should look like a bearish Harami. This phase is crucial. It is best to only trade if the second candle of the pattern meets these conditions.

- You don't need to wait for trend confirmation in order to use the three-inside down pattern. This is due to the fact the third candle in this pattern is itself a confirmation candle.

The pattern and the bearish trend reverser must be successful. Therefore, the third candle must also be bearish. This third bearish candle must also close below the second bearish and first bullish candles.

Once all conditions have been met, the trend reversal will be declared. You are now free to use your trading strategy of choice.


It is easy to spot the three-inside down pattern on charts quite often. Here's a tip for dealing with this indicator: The strength of the trend reversal is determined by the position of the second bearish candles. The trend reversal will likely be slower if the second bearish candle is shorter than the first bullish candle. However, if the second short bearish candle appears at the top of the first bullish candles, then the trend reversal will be faster.

What is Online Trading?

Trading Platform/Tools

How to invest in stock market for beginners?

Online Trading vs Offline Trading

How does online trading work?

Investment management errors that commonly occurs

Introduction to Share Trading

Stock Market Terms for the beginners.

What is the power of Compounding?

What is Limit order and how does it works?

What is Stop Loss?

What is SIP in share market?

What is Value Investing ?

Stock trading Terminologies

India Brokerage Charges

Basics of Forex Trading

Options for Investment after Retirement

Difference between Order book and Trade book

What is Radar signal Trading system?

What is Moving Averages?