Three Outside Down



candle
Pattern reversal
Reliability high
 

Identification

A bearish Engulfing pattern is followed by a black day whose close is lower than the second day.

Psychology

In an uptrend or within a bounce of a downtrend, a bearish Engulfing pattern forms. By itself this pattern has moderate reliability as a reversal indicator, but when the it is followed by another black day (preferably on strong volume), the overall pattern becomes much more reliable.

The bearish Three Outside Down is a continuation of the bearish Engulfing.