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A bearish reversal pattern that starts with a harami and adds confirmation. The third candle proves what the second candle suggested.
The Three Inside Down is a bearish reversal pattern consisting of three candles. It begins with a large bullish candle, followed by a smaller bearish candle that forms within the body of the first (a Bearish Harami), and concludes with a third bearish candle that closes below the first candle's open.
This pattern essentially combines a Bearish Harami with a confirmation candle. The third candle validates the reversal signal, providing a higher-probability entry than trading the harami alone. The three-candle structure tells a complete story: strength, hesitation, and confirmed reversal.
The Three Inside Down tells the story of a reversal in three acts. The first candle — large and bullish — shows the uptrend in full force. Bulls are confident.
The second candle opens within the prior body and closes lower, still inside the first candle's range. This is the harami — the first sign that buying momentum has stalled. The failure to make new highs should put traders on alert.
The third candle is the confirmation. It closes below the first candle's open — the level where bulls made their stand. When that level breaks, it proves the harami wasn't noise. The reversal is real, and the three-candle structure gives you more confidence than trading a standalone harami.
Conservative: Enter short on a break below Day 3's low.
Aggressive: Enter short at the close of Day 3.
Above the high of the first (bullish) candle. The mother candle's high is the invalidation — if price clears it, the bearish reversal has failed.
T1: Previous swing low or support. T2: Measured move equal to the first candle's body projected downward.
Minimum 1:2. The built-in confirmation candle makes this more reliable than a standalone bearish harami.
The Three Inside Down is a bearish reversal pattern that essentially combines a Bearish Harami with a confirmation candle. Its reliability comes from the three-candle confirmation structure, but like all reversal patterns, it needs proper trending context to be meaningful.
This is a harami with confirmation. The third candle's close below the first candle's low seals the bearish reversal.
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