Three Outside Up Candle Pattern

Three Outside Up Candlestick: Summary

The three outside up candlestick acts as a bullish reversal both in theory and in reality. And it does so quite well. It has a high frequency number, so you should be able to find is as often as feathers on a duck. The overall performance is also quite good and that means the price trend, post breakout, is worthwhile if not downright tasty. However, you will want to avoid this candlestick pattern if you hold it for a short term (10 days). Upward breakouts under those conditions do particularly lousy. For longer term holds, avoid those in a bull market after a downward breakout.

Three Outside Up Candlestick: Important Results

Theoretical performance: Bullish reversal

Tested performance: Bullish reversal 75% of the time

Frequency rank: 24

Overall performance rank: 34

Best percentage meeting price target: 47% (bull market, up breakout)

Best average move in 10 days: -7.14% (bear market, down breakout)

Best 10-day performance rank: 7 (bear market, down breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. “Best” means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

Three Outside Up

Three Outside Up Candlestick: Discussion

The best move 10 days after the breakout is a drop of 7.14% in a bear market. That ranks 7th, near the top of the list of 103 candle types. Looking at the measure rule, it says that the height of the candle added to the top of the candle pattern (an upward breakout) or subtracted from the bottom of the pattern (a downward breakout), gives a price target. Price only hits the target 47% of the time — and that is the best showing. It warns not to expect a straight-line run before you encounter a minor high or low along the way.

Three Outside Up Candlestick: Identification Guidelines

Characteristic	Discussion
Number of candle lines	Three.
Price trend leading to the pattern	Downward.
Configuration	Look for a black candle in a downward price trend. Following that, a white candle opens below the prior body and closes above it, too. The last day is a candle in which price closes higher, according to Morris who developed the candle.

Three Outside Up Candlestick: Three Trading Tidbits

Three outside up candles that appear within a third of the yearly low perform best — page 785.
Select tall candles for the best performance — page 785-786.
For the best performance, look for the pattern in a downward retracement of the upward price trend — page 786-787.

Three Outside Up Candlestick: Example

Since price enters the three outside up from the top and exits out the top, it is a bullish reversal in this instance. However, the best trading setup is one in which price is trending upward over the longer term. Then price drops in a retrace of that up move followed by an appearance of the three outside up candlestick pattern. An upward breakout from this candle would rejoin the existing price trend, and off she goes.