For a better understanding of this article, you should already know what Japanese Candlesticks are and all their features; for this reason, we suggest you to read this introductory article to Japanese Candlesticks: Japanese Candlestick Chart ( So that you can understand also the Ratings given to the Candlestick Patterns for the “quality” of the signal and for their frequency to “appear” on Charts).
Let’s analyse now the following Candlestick Pattern: “Three Outside Down”.
– Normally it should be a signal of reversal of the current Trend.
– You can find it in the variants: Up and Down, depending on the Trend in which is located.
Three Outside Down
– It occurs during an Uptrend; confirmation is required by the candles that follow the Pattern.
– The First Candle is white.
– The Second Candle is long and black; it has the Real Body that fully contains the First Candle.
– The Third Candle is black; it has the Close below the Close of the Second Candle.