25. (BEARISH THREE OUTSIDE DOWN) Bearish Candlestick Patterns - from candlesticker.com

To see the performance of the pattern in your stock exchange in the context of other stock markets please examine the table below. Find your stock market there and see how it ranks among the others. This will give you an idea about the pattern’s strength and reliability and help you in your selling decisions.

BEARISH THREE OUTSIDE DOWN

Definition

This is a confirmed Bearish Engulfing pattern. The first two lines are exactly the same as the Bearish Engulfing pattern and the third day represents its confirmation.

Recognition Criteria

1. The market is characterized by a prevailing uptrend.
2. We see a Bearish Engulfing pattern in the first two days.
3. Then, we see a black candlestick on the third day with a lower close than the second day.

Pattern Requirements and Flexibility

A Bearish Engulfing pattern should be identified with all previously set rules. The third day should be a black day with a lower close.

Trader’s Behavior

The first two days of the Bearish Three Outside Down is simply a Bearish Engulfing Pattern, and the third day confirms that the uptrend is damaged as suggested by this pattern, since it is a black candlestick closing with a new low for the last three days. However, for a bearish reversal, there is still a need for a further confirmation.

Sell/Stop Loss Levels

The confirmation level is defined as the last close. Prices should cross below this level for confirmation.

The stop loss level is defined as the last high. Following the bearish signal, if prices go up instead of going down, and close or make two consecutive daily highs above the stop loss level, while no bullish pattern is detected, then the stop loss is triggered.

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