BULLISH THREE OUTSIDE UP
Definition
This is a confirmed Bullish Engulfing pattern. The first two candlesticks follow the classic Bullish Engulfing pattern, and the third day provides its confirmation.
Recognition Criteria
1. The market is currently defined by a dominant downward trend.
2. We observe a Bullish Engulfing pattern over the first two days.
3. On the third day, a white candlestick forms, closing higher than the second day’s close.
Pattern Requirements and Flexibility
A Bullish Engulfing pattern should be identified with all the previously established rules. On the third day, a white candlestick closes higher than the previous day’s close.
Trader’s Behavior
The first two days of the Bullish Three Outside Up pattern form a typical Bullish Engulfing Pattern. On the third day, a white candlestick appears, closing at a new high for the past three days, confirming that the downtrend is weakening. However, additional confirmation is still needed to establish a bullish reversal.
Buy/Stop-Loss Levels
The confirmation level is set at the last closing price. For confirmation, prices need to surpass this level.
The stop-loss level is set at the last low. After a BUY signal, the stop-loss is triggered if prices decline instead of rising and either close below the stop-loss level or record two consecutive daily lows below it, without any bearish pattern being detected.