The Three Inside Down candlestick pattern is a set of three candlesticks that signals a reverse from up to down. This is a set of three Japanese candles widely used in Forex, Binary Option, etc. Within the scope of today’s article, we will introduce to you this special candlestick pattern.
Video on how to identify and use Three Inside Down candlestick pattern
What is Three Inside Down candlestick pattern?
Three Inside Down is a special Japanese candlestick pattern. It usually appears at the peaks of the price. Like other bearish reversal candlestick patterns, this is a warning signal for future declines.
In trading, using this reliable price signal effectively will help you with safe DOWN orders.
Structure of Three Inside Down candlestick pattern
The standard pattern consists of 3 candles.
- The first is a strong green bullish candle.
- The second one is a red bearish candlestick with at least half the length of the first.
- The last one is a red candle of which the closing price is lower than the opening price of the first candle.
Variant candlestick patterns
The variant candlestick patterns of Three Inside Down are also carefully considered when analyzing the price chart. Each variant has a different shape. Depending on the second candle in the pattern, we have the following variants of candlestick patterns:
(A) Three Inside Down pattern with the first two candles forming a Bearish Harami candlestick pattern.
(B) The pattern of which the second candle is a Pin Bar.
(C) The pattern of which the first 2 candles forming a Dark Cloud Cover candlestick pattern.
Three Inside Down is a special candle pattern that signals a price reversal from up to down. This price signal often appears at the end of an uptrend and signals future price declines. Let’s take a look at some of the appearance of this candle pattern on the Japanese candlestick price chart.
Three Inside Down meaning
It is a Japanese candlestick pattern consisting of 3 candles. Combining the 3 candles of the Three Inside Down candlestick pattern, you will get a Bearish Pin Bar (aka Shooting Star) candlestick pattern. This is a common bearish signal. This explains why this is a reliable bearish signal.
How to use Three Inside Down candles in Binary Options
This will guide you to use this special candlestick pattern to open binary options most optimally. The best way to use it is to combine the candlestick pattern with trend indicators. At that time, the entry signal is when the Three Inside Down candles appear.
Notes: This pattern is a reversal bearish signal. So when using it, you can only open DOWN options.
Combined with resistance
Support/Resistance is always the top priority indicator in trading because of its accuracy. With this combination, when the price increases and touches the resistance level, it will probably decline. If the price creates a Three Inside Down pattern here, it notifies traders that the price will actually decrease. You can completely open a DOWN option right now.
Conditions: A 5-minute Japanese candlestick chart. The expiration time must be 15 minutes or more.
How to open an option
+ Open a DOWN option when the price touches the Support zone, forming a Three Inside Down pattern.
Combined with SMA30
SMA30 is a great indicator of price trend analysis. In this strategy, when the SMA30 points down, the market is in a downtrend. The pattern is now an entry signal for opening DOWN orders.
Conditions: A 5-minute Japanese candle chart, SMA30 indicator. The expiration time must be 15 minutes or more.
How to open an option
+ Open a DOWN option when the SMA30 points down. The price is below the SMA30 and forms a Three Inside Down pattern.
Notes when using Three Inside Down candlestick pattern in Binary Options trading
- This is a strong signal in price behavior analysis. However, combine it with other indicators to increase the accuracy of the transaction.
- The accuracy of this candlestick pattern is proportional to the size of the candlesticks in the pattern.
- Limit trading with this candlestick pattern when there is news of strong fluctuation.
- Experience it on a DEMO account at least 2 weeks before using this pattern in trading with real accounts.