Three Inside Up

Three Inside Up: The Confirmed Harami

Updated: 2026-03-01 · Expert Analysis by Senior Trading Analyst · SEO Optimized for Beginners

1. Introduction: Adding Certainty to the Harami

The Bullish Harami is a sign that the trend might be changing. The Three Inside Up is a sign that the trend has changed. It takes the uncertainty of the Harami and resolves it with a strong bullish move on the third day.

For traders who prefer higher win rates over catching the absolute bottom, the Three Inside Up is an excellent pattern. It sacrifices a small amount of potential profit (by waiting for the third candle) in exchange for a much higher probability of success.

2. Anatomy of the Pattern

To identify a valid Three Inside Up, look for this sequence at the bottom of a downtrend:

1. Candle 1: A long bearish candle that continues the downtrend.
2. Candle 2: A small bullish candle that is completely contained within the real body of the first candle (this is the Harami).
3. Candle 3: A bullish candle that closes above the close (and preferably the high) of the second candle. Ideally, it should also close above the open of the first candle, but this is not strictly required.

3. Market Psychology: The Bulls Strike Back

The psychology unfolds in three stages:

• Stage 1 (The Drop): The bears are in control, pushing the price down aggressively.
• Stage 2 (The Pause): The bulls step in and stop the decline. The price stabilizes, forming the small inside candle. The bears are losing momentum.
• Stage 3 (The Reversal): The bulls take charge. They push the price up significantly, breaking through the resistance of the previous days. This confirms that the sentiment has shifted from bearish to bullish.

4. Professional Trading Strategies

This pattern is its own confirmation, so you can often trade it immediately.

1. Entry: Enter a long position near the close of the third candle, or on the open of the next candle.
2. Stop-Loss: Place your stop-loss below the lowest low of the three candles (usually the low of the first or second candle).
3. Target: Look for the next major resistance level or a measured move equal to the height of the first candle.

5. Conclusion

The Three Inside Up is a "high confidence" reversal pattern. It filters out the false signals that can occur with a standard Harami, making it a favorite among conservative traders who value reliability.