Back

Definition

 

Bearish Three Outside Down is also called Confirmed Bearish Engulfing formation. The third day can confirm the trend reversal.

  • Trend: Reversal
  • Expected trend: Bearish
  • Previous trend: Bullish
  • Reliability: High
  • Type: Bearish
  • Number: 3

Recognition

  • The market is in an upward trend.
  • The first two days make up a Bearish Engulfing formation.
  • The third day is a black candle with its closing price below the closing price of the candle on the previous day.

Interpretation

This formation gives a more reliable reversal signal than the Bearish Engulfing pattern. One can be sure about the reversal on the third day.

Important factors

The formation is highly reliable, but requires a confirmation. The confirmation could come from a black candle with a downward gap or a lower closing price.