Candlestick Patterns · Bearish
Three Outside Down
A bearish engulfing pattern plus a third candle that closes lower.
The engulfing candle takes back the prior bullish body. The next candle closes below that engulfing candle.
This is an example of how traders often plan the pattern. It is not a promise that price will reach the target.
Identification
- Candles one and two form a bearish engulfing pattern.
- Candle three closes below candle two.
Market context
The third candle is the follow-through.
Entry example
An example entry is below the third candle.
Stop-loss example
An example stop is above the engulfing candle's high.
Target example
An example target is the swing low before the rally.
Common mistakes
- Calling it complete on the engulfing candle alone.
Candlestick and chart patterns are probabilistic observations, not guaranteed trading signals. This page does not report a win rate.