Discover a powerful, secret strategy for
trading the Three Inside Up candlestick pattern that no one tells you. The
strategy is a unique one developed by our technical team of MoneyWiseMind.com. Learn
step-by-step with practical examples to enhance your trading skills and
maximize profits.
What
is the Three Inside Up Candlestick Pattern And how It Is Formed?
The 𝗧𝗵𝗿𝗲𝗲 𝗜𝗻𝘀𝗶𝗱𝗲 𝗨𝗽 𝗖𝗮𝗻𝗱𝗹𝗲𝘀𝘁𝗶𝗰𝗸 𝗣𝗮𝘁𝘁𝗲𝗿𝗻 is a bullish reversal pattern. This pattern forms after a
long downtrend.
This pattern forms through the
following sequences:
First, the market is in a
recognizable downtrend before forming the pattern. It signifies the market is
in full control of the bears.
Secondly, then at the bottom a big
bearish candle is formed to confirm the sellers grip on the market.
Thirdly, a small bullish or neutral
candle forms after the bearish candle that confirms a pause in the existing
selling pressure. We can say that the sellers probably losing confidence and
buyers are trying to step into the market trying to push price higher.
Finally, in the sequence the third
candle forms which is a bullish one closes above the high of the first candle
confirming the completion of the pattern.
SwingTrading Strategy for Trading The Three Inside Up Candlestick Pattern:
After getting the confirmation of this pattern we try to go for swing trading in daily time frame. Swing trading means we buy the stock for 1-2 days to 10-15 days to get the maximum profit.
We generally see that a security when it
reaches at a support level or an area of value, the area where the buyers become
active to push the price higher, the RSI tries to surpass the 40 line from
below. That is the right time to looking for buying opportunity after the formation
of the three inside up candlestick pattern. This condition gives us the double
confirmation for the pattern.
After we got the confirmation, we
try to go long or look for buying opportunity. We have developed a strategy to
trade the three inside up candlestick pattern combined with RSI, the momentum
indicator. RSI is a leading indicator, or we can call it a famous oscillator
used by technical analysts. It was introduced by J. Welles Wilder in 1978.
We call RSI a momentum indicator or a
speedometer which measures the speed or intensity of the price trend. We use
the default look-back period of 14 days. RSI has a default value of 30 in lower
side and 70 in upper side. But we avoid this default setting, instead we take
40 in lower side and 60 in upper side. It means RSI below 40 the trend becomes
week, RSI above 60 trends becomes strong.
Utilizing this idea of RSI we
developed this strategy. After getting confirmation of the three inside up candlestick
pattern, we look for the location of the RSI. As this pattern forms after
a downtrend, so we can see this pattern probably forms at the support level. We
mark this zone as an area of value from where the price may bounce back or the
price takes a pause to fall further.
Then we are looking to RSI
crossing the 40 line from below. We can see this from the above chart, RSI
crossed the 40 line from the below and at the same time the pattern has already
formed. That is the right time to go long in the stock. We generally enter to
buy the stock above the high of the third candle. We keep our stop-loss below
the low of the third candle. When the trade goes in our favor we trail our
stop-loss to maximize our profit target. Target should be 1:3 ratio.
Intraday
Strategy for Trading the Three Inside Up Candlestick Pattern:
When we look for a
intraday trading opportunity in this pattern, we take 30 minutes or one hour
time frame chart of the security. See the above the chart is in hourly time
frame of NASDAQ 100 E-Mini Futures.
From the above chart
we can see that when the first bearish candle forms, then RSI was below the 60
level but approaching upward. Then the small bullish candle forms and at the
same time the RSI tries to go above 60 line. And finally, with the formation of
the third bullish candle, the RSI surpasses the 60 line which gives us the
double confirmation of the pattern.
Above the third candle’s
high we go for a long trade, keeping a stop-loss below the same candle's low.
Profit target should be 1:3 ratio. This is a pure example of an intraday
trading using the three inside up candlestick pattern in hourly chart. One can
do in 15 minutes also. But we developed this strategy in hourly time frame
getting full-proof setting. We think that higher the time frame, more reliable the pattern will be.
Conclusion:
Finally, we will say
that there is no foolproof strategy in the market. All strategies have
demerits also. All depend on the market overall structure for the time being.
There are thousands of strategies available in the market. Remember one thing
that strategy plays only 20% and rest 80% is psychology.
If you jump from one
strategy to another within few days you will not be successful in trading. You
have to practice one strategy taking minimum 100 trades in different market
conditions. Then only you will realize the actual benefit of the strategy.
Focus on practice, develop your own strategy, and trade cautiously.
If you like this
article, feel free to share with your friends. Happy trading.
Disclaimer: The information provided on MoneyWiseMind is for educational and informational purposes only. It is not intended to be financial advice, and you should not rely on it as such. Before making any financial decisions, you should consult a licensed financial advisor.
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