Three Inside Up

The Three Inside Up is a three-candle bullish reversal pattern that builds on the Bullish Harami. The first two candles form a Bullish Harami (large bearish candle followed by a small bullish candle inside its body), and the third candle is a bullish confirmation candle that closes above the first candle's open (above the top of the bearish candle's body). The third candle is the key — it provides the confirmation that the Harami alone lacks.

Pattern Anatomy

• Candles 1-2 form a Bullish Harami: large bearish candle followed by small bullish candle entirely inside the first's body
• Candle 3 must be bullish (Close > Open) — the confirmation candle
• Candle 3 must close above Candle 1's Open — the top of the first candle's bearish body
• This breakout above the body top proves buyers have truly taken control, not just shown a moment of indecision
• Essentially a "confirmed harami" — the third candle is what makes it actionable

How to Interpret

• More reliable than a standalone Harami because of the confirmation candle
• Most significant after a sustained downtrend
• The three candles tell a complete story: selling (candle 1), indecision (candle 2), buying takeover (candle 3)
• Volume increasing on candle 3 adds conviction
• Best at support levels

Expert References

• Steve Nison and Thomas Bulkowski both describe Three Inside Up as a confirmed version of the Harami
• The confirmation candle significantly improves reliability compared to a standalone Harami (which only reverses approximately 53% of the time)
• Bulkowski found Three Inside Up acts as a bullish reversal approximately 65% of the time

Controversy & Limitations

• Slower to form than simpler patterns — requires three candles instead of one or two
• By the time candle 3 confirms, part of the reversal move may already be priced in
• Some analysts argue you could simply use the Harami as an alert and the engulfing-style close on day 3 as your entry, achieving the same effect without labeling it a separate pattern