BEARISH THREE INSIDE DOWN
Definition
This is a confirmed Bearish Harami pattern. The first two candlesticks match the Bearish Harami formation, and the third day provides bearish confirmation.
Recognition Criteria
1. The market is currently defined by a dominant upward trend.
2. We see a Bearish Harami (or a Harami Cross) pattern in the first two days.
3. Then, we see a black candlestick on the third day with a lower close than the second day.
Pattern Requirements and Flexibility
A Bearish Harami (or Harami Cross) pattern should be identified with all the previously established rules. On the third day, a black candlestick closes lower than the previous day’s close.
Trader’s Behavior
The second day of the Bearish Three Inside Down pattern already signals a trend reversal, as the small body (or Doji) on the second day indicates diminishing bullish momentum. The third day's candlestick confirms this observation, but additional confirmation is still required to establish a bearish reversal.
Sell/Stop-Loss Levels
The confirmation level is determined by the last close. For confirmation, prices should fall below this level.
The stop-loss level is defined as the last high. If, following the bearish signal, prices rise instead of falling and either close or make two consecutive daily highs above the stop-loss level, without detecting any bullish pattern, the stop-loss is triggered.