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Three Outside Up candlestick pattern

A bullish engulfing pattern confirmed by a third bullish candle that closes higher still.

Bullish reversal three-candle · Advanced

Illustrative shape. Real patterns vary in proportion.

How to identify a Three Outside Up

  • Appears after a decline
  • Candle 1: bearish
  • Candle 2: bullish, engulfing candle 1's body
  • Candle 3: bullish, closing above candle 2's close

What the Three Outside Up tells you

The engulfing candle flips control to buyers; the third candle shows they kept it. Follow-through is what separates a real reversal from a one-day bounce.

How traders use it

Entry is often on candle 3's close, with a stop below the low of the pattern.

Before taking any pattern-based trade, decide your stop first and size the position from it with the position size calculator.

Related patterns

Frequently asked questions

Is the Three Outside Up bullish or bearish? +

The Three Outside Up is a bullish reversal pattern. A bullish engulfing pattern confirmed by a third bullish candle that closes higher still.

How reliable is the Three Outside Up? +

No candlestick pattern works every time. Patterns are more reliable when they form at a meaningful level (support, resistance, a moving average), after a clear trend, on higher volume, and when the next candle confirms them.

Do I need confirmation to trade the Three Outside Up? +

Most traders want it. Waiting for the next candle to move in the expected direction filters out many false signals, at the cost of a slightly worse entry price.

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