A large first candle, a small second candle nested inside its body (a Harami), then a third candle that closes in the reverse direction. A Harami with one confirming candle added — up at a bottom, down at a top.
Three Inside Up / Down is a three-candle reversal pattern. Its foundation is the Harami, to which a third confirming candle is added — in effect, a confirmed Harami.
Take only the first two candles and you have a classical Harami: a small second candle nested entirely within the body of a large first candle. The Harami signals a loss of momentum, but on its own it is only an early warning and confirms nothing. Three Inside adds a third candle that promotes that loss of breath into an actual reversal.
The bullish version at a bottom is Three Inside Up; the bearish version at a top is Three Inside Down. The word inside refers to the Harami structure itself: the second candle closing inside the body of the first.
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