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To evaluate the performance of the pattern in your stock exchange within the context of other global markets, please refer to the table below. Locate your stock market to see its ranking among others. This will provide insights into the pattern’s strength and reliability, aiding you in your buying and selling decisions.
BEARISH THREE OUTSIDE DOWN
Definition
This is a confirmed Bearish Engulfing pattern. The first two candlesticks follow the classic Bearish Engulfing pattern, and the third day provides its confirmation.
Recognition Criteria
1. The market is currently characterized by a strong upward trend.
2. We see a Bearish Engulfing 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 Engulfing 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 first two days of the Bearish Three Outside Down pattern form a Bearish Engulfing Pattern. On the third day, the pattern is confirmed as the uptrend is disrupted, indicated by a black candlestick closing at a new low for the last three days. However, further 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.