The Three Inside Up and Three Inside Down patterns are three-candle variations of the Harami pattern. They add a confirmation candle (Day 3) to the Harami, making them significantly more reliable reversal signals. Think of them as "Harami with confirmation."

Pattern Diagrams

Three Inside Up C1 C2 C3 C3 closes above C1 open โ†’ Bullish Three Inside Down C1 C2 C3 C3 closes below C1 open โ†’ Bearish

Three Inside Up Rules

  1. Day 1: Large bearish candle (in a downtrend)
  2. Day 2: Small bullish candle within Day 1 range (Harami)
  3. Day 3: Bullish candle closing above Day 1 open โ€” confirming reversal

Three Inside Down Rules

  1. Day 1: Large bullish candle (in an uptrend)
  2. Day 2: Small bearish candle within Day 1 range (Harami)
  3. Day 3: Bearish candle closing below Day 1 open โ€” confirming reversal

Trading

Three Inside Up Entry:
Entry: Buy on close of Day 3 or open of Day 4
Stop Loss: Below the low of Day 1
No additional confirmation needed โ€” Day 3 IS the confirmation
This pattern is significantly more reliable than a basic Harami
Unlike a basic Harami that requires a fourth candle for confirmation, the Three Inside Up/Down provides its own confirmation with Day 3. This lets you enter one candle earlier with full confidence โ€” giving better risk-reward than waiting for a Harami confirmation.