Bearish Three Inside Down Pattern

Three inside down is a bearish trend-reversal pattern indicating the end of an uptrend and start of a new downtrend. It is a three candlestick pattern which is the ‘confirmation of bearish harami candlestick formation’. The first two day candlesticks of bearish three inside down pattern forms bearish harami pattern, and the third day candlesticks, which is bearish, confirms the trend change.


The requirements of a bearish three inside down pattern include,

• The pattern should form at the top of a significant uptrend.
• The first day is a bullish day characterized by a long bullish (white/colorless) candlestick indicating continuation of existing trend.
• The second day market opens a gap below first day candlestick (exception: forex) and the small real-bodied bearish (black/colored) candlestick closes with in the real-body of first day candlestick, forming the bearish harami.
• Third day is also a bearish day which closes below the real-body of first day candlestick.

The confirmation of bearish harami pattern on third day makes it clear that bears are now controlling the market and prices are expected to go down. The formation mostly occurs at mornings.

Bearish three inside down pattern is considered highly reliable. Reliability of pattern increases with increase in real-body and trading volume on day three. Because it is the confirmation of other pattern, no more confirmation is suggested.

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