Learning Hub
Three Outside Down
bearish
Definition
A bearish engulfing plus a third red close beneath it.
Psychology
Red engulfs green, then another red — sellers confirmed their coup.
Real-life analogy
💡 The ambush, then the retreat becomes a rout.
Confirmation
Self-confirmed at candle 3.
Invalidation
A close back above the engulfing high.
Historical behaviour
Strong after distribution churn at highs.
Illustrative success rate
~60-70% · High reliability
Common beginner mistakes
- • Entering exhausted extensions far from resistance
- • Confusing with just two red candles
Quick quiz — did you understand?
1. Is the Three Outside Down generally considered bullish, bearish, or neutral?
2. What is the best practice before acting on a Three Outside Down?
3. Which is a common beginner mistake with the Three Outside Down?
Educational and probability-based analysis only. This is not financial advice and not a prediction of real market outcomes.