Three Outside Down: a bearish engulfing (two candles) followed by a third confirming bearish candle that closes lower. In essence it is a bearish engulfing with built-in confirmation, which makes it more reliable than a standalone engulfing.
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PATTERN ID
SignalBearish ▼
Reliability★★★★☆
Win Rate66%
Expected move−4–9%
TimeframeDaily / weekly
Confirmationcandle 3 confirms
The short answer
What is a Three Outside Down candle?
Three Outside Down (Three Outside Down): a bearish engulfing (two candles) followed by a third confirming bearish candle that closes lower. In essence it is a bearish engulfing with built-in confirmation, which makes it more reliable than a standalone engulfing.
How do you spot a Three Outside Down candle?
First candle: small bullish candle inside an uptrend. Second candle: large bearish candle that fully engulfs the body of the first. Third candle: bearish, closing below the close of the second.
Is the Three Outside Down candle a bullish or bearish signal?
A bearish reversal pattern made of 3 candles. Confirmation: candle 3 confirms. Reference success rate 66%. You can spot it yourself on live daily candles for any symbol in the members' technical terminal. Open the technical terminal →
Pattern illustration
Bearish engulfing + a third candle confirming with a lower close
How to identify the pattern
Step-by-step checks
First candle: small bullish candle inside an uptrend
Second candle: large bearish candle that fully engulfs the body of the first
Third candle: bearish, closing below the close of the second
Volume rises across the second and third candles
Trading psychology
The power struggle between buyers and sellers
The second candle turns the tide by engulfing the whole buying session, and the third confirms seller control with a lower close. Confirmation across three sessions makes the reversal sturdier than a two-candle pattern alone.
Outlook and confirmation
Entry conditions and expected price move
Confirmation is built in: the confirming candle is part of the pattern
Reliable bearish reversal ~66%. A decline of 4–9% over 6–12 days is typical. The stop-loss sits above the high of the second candle.
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