(Bearish)
Three Outside Down |
Characteristic of Candlesticks: Reversal
Relevance of Candlesticks: Bearish
Prior Trend of Candlesticks: Bullish
Reliability of Candlesticks : 2nd Grade
Confirmation of Candlesticks: Reliable
Candlestick Patterns Key Reference |
DESCRIPTION
(Bearish) Three Outside Down pattern is a confirmation of a top reversal after a Bearish Engulfing pattern is formed.
The third candlestick act as a confirmation when the it closes lower than the previous two candlesticks.
PATTERN RECOGNITION
1. (Bearish) Three Outside Down pattern can be identified by a uptrend followed by a top reversal.
2. Refering to above diagram, firstly we will see a small bullish candlestick then the second candlestick formed a Bearish Engulfing pattern.
3. Then we see the third bearish candlestick with a higher close than the second candlestick which act as a confirmation of top reversal.
EXPLAINATION
The first small candlestick implies that a trend is weak and lost its momentum.
The Bearish Engulfing pattern is a reliable indication to indicate a top reversal signal and a change in sentiment.
The third candlestick with a lower close than the previous two candlesticks confirm the top reversal.
The 2nd grade reversal patterns are reliable group of reversal patterns.
POINT TO NOTE
The reliability of (Bearish) Three Outside Down pattern is very high, but a confirmation is still required in a form of a bearish candlestick which a lower close or a gap down is suggested.
CANDLESTICK PATTERNS KEY REFERENCE
Irrespective of Color (Can be bullish or bearish) |
Uptrend |
Consolidation |
Downtrend |
ANTICIPATED DIRECTION OF TREND
Lighter Arrow = Lower Probability
Solid Arrow = Higher Probability
More Likely to go sideway, Less likely to rally
|
More likely to rally, Less likely to go sideways
|
More likely to go sideway, Less likely to fall
|
More likely to fall, Less likely to go sideways |
