Candlestick Patterns
Three Inside Up / Three Inside Down
A harami by itself is just hesitation. This pattern adds a third candle that has to confirm the reversal, and confirm it on time.
Time the confirmation, then earn it
Candle one is a large trend candle. Candle two is a harami, already checked and locked in as genuinely contained inside candle one's body, that part isn't the test here. What matters is candle three. Use the slider to decide how many bars pass before a confirmation attempt shows up, then drag that candle's close to set how far it pushes past candle one's open. Both have to line up, arriving immediately and closing far enough, for the badge to confirm.
Harami confirmed: candle two is fully contained in candle one's body
Drag the handle on the confirmation candle.
How it works
- Candle one sets the stakes. A long-bodied candle in the direction of the current trend, down for Three Inside Up, up for Three Inside Down. Its open becomes the confirmation line every later candle has to clear.
- Candle two is the harami, and only the harami. A small body fully contained inside candle one's real body. On its own it means the trend has lost conviction, nothing more. It does not confirm a reversal by itself.
- Candle three has to close beyond candle one's open. Above it for Three Inside Up, below it for Three Inside Down. That is the confirmation, measured off the actual close price, not off how far the candle looks like it moved.
- It has to be the very next candle. The name says "three inside," not "eventually inside." A candle that finally clears the line two or three bars later is a different, weaker signal, the immediate reversal never happened, the trend resumed after a longer pause.
- Timing and strength are two separate checks. A candle can close well beyond the threshold and still fail the pattern if it shows up late, and a candle can arrive on time and still fail if it doesn't close far enough. Both conditions have to hold at once.
Where this breaks
Traders count a late reversal as if it arrived on schedule
The harami puts a "reversal is possible" idea on the chart, and once that idea is planted, it's tempting to credit the next candle that finally confirms it, whenever it shows up, as the pattern completing. But a confirmation that arrives three or four bars after the harami isn't the same signal. The market had time to churn, chop, or drift in between, and whatever caused that late close to clear the threshold may have nothing to do with the original hesitation candle at all. Traders who hold through that gap waiting for late confirmation are effectively trading a slower, less defined setup while still pricing in the risk of the fast one. The pattern's edge, to the extent research supports one, comes from the immediacy, not just the eventual direction being right.