Now, we are in the part III of Candlestick Patterns: 7 Strong Bullish Reversal Technical Analysis series. So far, we have learned three of seven strong reversal signal of bullish candlestick patterns which are Bullish Abandoned Baby, Bullish Piercing Line, and Bullish Morning Star. In my opinion, these three candlestick patterns are surely already enough as weapon to do stocks analysis to make the right choice in term of stocks buying (includes what and when to buy).
However, in my opinion, we still need to learn the rest of the 7 strong reversal signal of bullish candlestick patterns since it will increase the benefit probability from our stocks’ technical analysis. In other words, the more of chart pattern number that we know, more possibility to see the available pattern during our stocks trading. Therefore, let’s do technical analysis into other two of strong bullish candlestick patterns which are Bullish Three Upside Up Candlestick Patterns and Bullish Three Inside Up Candlestick Patterns.
Technical Analysis of Bullish Three Outside Up Candlestick Patterns
Bullish Three Outside Up is a three candlestick patterns in where needed three candlesticks to fully form the chart pattern. This Three Upside Up candlestick pattern acts as a technical analysis’ strong signal that tell us the stocks has started to ride the uptrend. For better understanding, let’s take a look at the image below:
From image above, we can see that there are three candlesticks that create the chart pattern – a solid black candlestick and two solid white candlestick. Also please be aware these chart pattern is happened after a significant downtrend (bearish). Let’s assume the chart pattern is happened in daily basis for sake of simplicity. At the first day, there is a solid black candlestick which means the sellers still rule the market with full power.
However, in second day, there is a solid candlestick that “engulf” the black candlestick. From technical analysis point of view, it means that the buyers rule the market fiercely – the buyers power even more powerful than the strong sellers power in the first day. Indeed, this two days patterns is a bullish engulfing pattern which is already a strong bullish signal. But, usually, a bullish engulfing pattern is still need a technical analysis confirmation at the next days.
And here the confirmation at the next day (at the third day), a solid candlestick which has closing price in above of the second day white candlestick significantly. This third day’s solid candlestick means that the buyers still continue to rule the market and the sellers is still do not have enough power to counter-attack. This is what we call as Bullish Three Outside Up Candlestick Patterns. In other word, we also call it as a Bullish Engulfing pattern with confirmation as like image below:
This Bullish Three Outside Up Candlestick Patterns is surely a strong buy signal so we can decide to start a stocks buying without wait for another confirmation from Technical Analysis (TA) indicators. It is natural since there is already a confirmation in this chart pattern.
Technical Analysis of Bullish Three Inside Up Candlestick Patterns
Bullish Three Inside Up is a three candlestick patterns in where it is needed three candlesticks to form the chart pattern. This bullish candlestick pattern is similar with Bullish Three Outside Up candlestick patterns. The difference is that at the second day’s solid white candlestick. Here the Bullish Three Inside Up Candlestick pattern:
From picture above, we can see that there are three candlesticks that create the chart pattern – a solid black candlestick and two solid white candlesticks. Please be aware that this chart pattern is happened in below of the current downtrend (bearish). For sake of easiness, let’s assume that this candlestick pattern is happened in daily basis. At the first day, there is a solid black candlestick which tell us that the sellers still rule the market in full power.
However, at the second day, there is a solid white candlestick. This second day’s white candlestick has the higher opening price but lower closing price if compare with the first day’s black candlestick. From technical analysis point of view, tt means that the buyers has started the counter-attack and start rule the market even with weaker power than the sellers power at the first day. Indeed, these two days candlestick has formed a bullish candlestick pattern which is the Bullish Harami pattern.
However, the Bullish Harami pattern is a weak buy signal so need (at least) a buying confirmation. And here the confirmation comes in third day. At third day, there is a solid candlestick which has opening price lower than second day’s opening price but the closing price is higher than the second day’s closing price as well as higher than the first day’s opening price. It means that the buyers continue to rule the market with more power.
It means that the market is strongly confirmed in uptrend (bullish) which means a good time to start buy the stocks. This Bullish Three Inside Up Trend is a strong buy signal since it is formed from a Bullish Harami pattern with confirmation. In other words, the confirmation is already there so no need to wait the confirmation from other Technical Analysis (TA) indicators. For more understanding about this built-in confirmation, just look the picture below:
Having a beneficial stocks trading everyone!