Three Outside Up candlestick pattern
A bullish engulfing pattern confirmed by a third bullish candle that closes higher still.
Illustrative shape. Real patterns vary in proportion.
How to identify a Three Outside Up
- Appears after a decline
- Candle 1: bearish
- Candle 2: bullish, engulfing candle 1's body
- Candle 3: bullish, closing above candle 2's close
What the Three Outside Up tells you
The engulfing candle flips control to buyers; the third candle shows they kept it. Follow-through is what separates a real reversal from a one-day bounce.
How traders use it
Entry is often on candle 3's close, with a stop below the low of the pattern.
Before taking any pattern-based trade, decide your stop first and size the position from it with the position size calculator.
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Frequently asked questions
Is the Three Outside Up bullish or bearish? +
The Three Outside Up is a bullish reversal pattern. A bullish engulfing pattern confirmed by a third bullish candle that closes higher still.
How reliable is the Three Outside Up? +
No candlestick pattern works every time. Patterns are more reliable when they form at a meaningful level (support, resistance, a moving average), after a clear trend, on higher volume, and when the next candle confirms them.
Do I need confirmation to trade the Three Outside Up? +
Most traders want it. Waiting for the next candle to move in the expected direction filters out many false signals, at the cost of a slightly worse entry price.
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