Three Inside Up/Down Candlestick Pattern: What It Looks Like and What It Means
Three inside up/down is a three-candle pattern: a harami (a small candle held inside a large one) followed by a third candle that closes in the reversal direction (higher after a fall, lower after a rise). That third candle is read as confirming the turn the harami only hinted at, so the pattern gets more trust than a bare harami. It is still a hint, not a forecast.
How It Forms
A candle sums up one period of trading: the body is the box from the open to the close, and the wicks run out to the high and the low. Closing higher than the open makes a candle bullish; closing lower makes it bearish. "Bullish reversal" means the market may stop falling and start rising; "bearish reversal" means the reverse.
The pattern has two versions, named for the turn. Three inside up begins with a long bearish candle that ends a fall; a small candle sits inside its body, and a third closes higher. Three inside down is the mirror image: a long bullish candle ends a rise, a small candle sits inside it, and a third closes lower.
All five candles in the drawing use made-up prices, and candles 2 to 4 make up the pattern:
| Candle | Open | High | Low | Close |
|---|---|---|---|---|
| 1 | $36 | $39 | $31 | $33 |
| 2 (long) | $33 | $35 | $15 | $17 |
| 3 (inside) | $21 | $29.50 | $19.50 | $28 |
| 4 (confirming) | $27 | $39 | $25 | $37 |
| 5 | $37 | $43 | $35 | $41 |
Candle 2's body runs from $33 down to $17. Candle 3's body, $21 to $28, fits inside it: the harami. Candle 4 then opens at $27 and closes at $37, above the $33 where candle 2 opened, so the price did more than pause.
How to Read It
- The third candle. It is what separates this pattern from a bare harami, so look at it first.
- The direction. Three inside up (after a downtrend) is bullish; three inside down (after an uptrend) is bearish.
- The strength of the third candle. A third candle that moves well away from the harami gives a firmer reading than one that barely moves.
What to Watch For
A small third candle that barely reverses leaves the confirmation thin, little better than a harami alone. The pattern also completes one period later than a harami does.
Two patterns sit close to it:
- A harami is the first two candles alone, so the difference is the candle count, not the shape.
- Three outside up/down starts with an engulfing pattern, where the second body covers the first, instead of a harami. That opening pair is what sets the two apart.
Free or Premium
Three inside up/down is one of the 10 extended patterns. On charts it appears once you turn on the opt-in that adds them, and that opt-in is part of Rapunzl Premium. In Rapunzl's Stock Scanner, the pattern filters include it for free.
Try It in Rapunzl
Pattern Markers live in Customize Chart → Chart Indicators → Levels, Patterns & AI Charts, and the chart needs to be Candlestick or OHLC. Switch them on with the opt-in for the 10 advanced patterns; bullish detections then carry a ▲ and bearish ones a ▼.
In the Stock Scanner, pick Three Inside Up/Down in the Bullish candlestick filter, the Bearish candlestick filter, or both; it appears in each. Students who prefer a ready-made list can open the idea "Bullish candlestick today", which covers company stocks that formed a bullish pattern on the latest day of trading. Its note adds that many such patterns do not lead to a rise.
A 15-Minute Class Activity
Three Days, Two Decisions. Pairs need pencils and paper. The teacher reads out a made-up "Stock Q" one day at a time. All prices are made up.
- 3 minutes. Read Days 1 and 2. Day 1: open $60, close $44, after a week of falling prices. Day 2: open $50, close $54. Pairs draw both bodies and say what they notice. (Day 2 sits inside Day 1: a harami.)
- 4 minutes. Ask what Day 3 would need to do before this counts as more than a hint. Then read Day 3: open $53, close $63. Pairs draw it and decide whether it confirms. (It closes above $60, Day 1's open, just as candle 4 in the table closes above candle 2's open.)
- 5 minutes. Pairs write a made-up three inside down: a long bullish Day 1 after a rise, a small Day 2 inside it, and a Day 3 that closes lower. They trade papers and check the numbers.
- 3 minutes. Exit ticket: in one sentence, say why the third candle makes this pattern firmer than a harami alone.
Related Patterns
- Harami: the first two candles of this pattern.
- Three Outside Up/Down: the same idea built on an engulfing candle.
- How to Read a Candlestick Chart: open, close, high and low on a single candle.
- Support and Resistance Levels: why the place a reversal forms matters.
Frequently Asked
Questions
It is a harami after a fall, followed by a candle that closes higher. The third candle is read as confirming the turn the harami hinted at.
It is the same pattern flipped. A long bullish candle ends a rise, a small candle sits inside it, and a third candle closes lower.
It is read as more reliable because the third candle adds confirmation. It is still a hint, and a weak third candle gives thin support.
Show Reversal Patterns in Your Classroom With Rapunzl
To bring candlestick reading into your lesson plans, request a demo and see the charts and simulator at work. Families learning together can start on our parents page.
Indicators, patterns and examples in this article are for education and are not investment advice or a recommendation to buy or sell any security.
By Clarissa Collins, Curriculum Designer at Rapunzl.