Three inside and three outside (up and down)

What it is

Three inside up starts with a large bearish candle, then a small bullish candle inside its body (a bullish harami), then a third candle that closes above the first candle's open. Three outside up is a bullish engulfing pattern followed by a third candle that closes higher still. The down versions are the mirror at a top.

The third candle is the point: it confirms the two-candle pattern instead of trading on it straight away.

How to spot it

• Inside: big candle, small opposite candle inside it, then a close beyond the big candle's open.
• Outside: an engulfing candle, then a close beyond it.

How to use it

• Enter after the third candle closes, with the stop beyond the pattern's extreme.
• Best at a level, after a clear move.

Common mistakes

• Entering on the second candle and calling it confirmed.
• Trading it mid-range.

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