Three Inside Up: The Confirmed Harami Reversal

Introduction

Conservative traders often skip the “Bullish Harami” because it is not a strong enough signal on its own. The Three Inside Up solves this problem.

It is simply a Bullish Harami followed immediately by a third confirmation candle. Image of three inside up candlestick <a href= pattern chart" src="https://encrypted-tbn0.gstatic.com/licensed-image?q=tbn:ANd9GcTseSpHuueZ0xuDdPkDDwl4FI7zb7e8x5ojye56gI19nk7PLV2gtngRk2uGD3skvWa25z_ffDW85YQmgsNNBLUFLIF8_5MXfQe5WknNRxxPP8GJDW4">

How to Identify It

Candle 1: Large Red candle.
Candle 2: Small Green candle inside the first one (The Harami).
Candle 3: A Green candle that closes higher than the first candle’s high.

The Psychology

The Harami (first two candles) signals the brakes are on. The third candle signals the gas pedal has been pressed. By closing above the start of the drop (Candle 1), the buyers have completely negated the bearish move.

Trading Strategy

Win Rate: This pattern has a higher statistical success rate than a standard Harami.
Entry: Buy on the close of the third candle.
Stop Loss: Below the low of the second (middle) candle.