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Solid ECN Securities | Best Place to Trade CFD Products
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[QUOTE="SOLIDECN, post: 210751, member: 80239"] [HEADING=1][JUSTIFY]What is Three Outside Down Candlestick Pattern[/JUSTIFY][/HEADING] [JUSTIFY]Three successive candlesticks form the three outside down pattern, which usually appears during a bullish trend. The movement of these candles always indicates whether or not a trend reversal is imminent. A single bullish candle is followed by two bearish candles to form the pattern. For counter-trend trading tactics to work, accurate detection of this pattern is critical. [/JUSTIFY] [HEADING=1][JUSTIFY]Formation[/JUSTIFY][/HEADING] [JUSTIFY]Below is the formation of the Three Outside Down Candlestick Pattern- [img]https://i.ibb.co/kGSjL56/candle-4.png[/img] 1. The market must be uptrend for a three outside down pattern to appear. 2. The pattern’s first candle will be white, signifying an uptrend. 3. A large black candle will be formed next. It will be long enough for the first white candle to be completely contained within its true body. 4. The third and final candle, which indicates three outside down, must also be black. This candle, however, should close higher than the second candle. This shows that the uptrend is changing direction. [/JUSTIFY] [HEADING=1][JUSTIFY]What Traders Interpret from a Three Outside Up Pattern[/JUSTIFY][/HEADING] [JUSTIFY]With the closing higher than the open, the first candle maintains the bullish trend, showing significant buying demand and building bull confidence. The second candle rises but quickly reverses, crossing through the starting tick in a bearish showing. This price action signals a red flag for bulls, signaling that gains should be taken or tightened because a reversal is possible. The asset is still losing money, with its price dropping below the first candle’s range, completing a bearish outside day candlestick. These boosts bear confidence and trigger selling signals, verified when the stock makes a new low on the third candle. [/JUSTIFY] [HEADING=1][JUSTIFY]Trading Example[/JUSTIFY][/HEADING] [JUSTIFY]As can be seen, the price is strongly going upward, indicating that the bulls have taken control of the market. As a result, the first candle in the pattern closes favorably, following the trend. The body of the candle, on the other hand, stays modest, which could indicate a slowdown in buying enthusiasm. Finally, the second candle opens ‘gap up,’ indicating the bulls’ attempt to push prices farther higher. [img]https://i.ibb.co/YjxLHwq/candle-5.png[/img] The purchasing enthusiasm has entirely faded at this time, and the bears have entered the market. This rapid surge of sellers in the market flips the market, causing the price to drop. The bears’ grip on the second session is so strong that the second candle’s closing price is lower than the bullish candle’s initial price. Because of the strong selling pressure, the second candle ends up engulfing the first. The bears ramp up the pace in the third session, with the pattern’s last candle ending in the negative zone. [/JUSTIFY] [HEADING=1][JUSTIFY]Bottom-line[/JUSTIFY][/HEADING] [JUSTIFY]We hope you found this blog informative and use it to its maximum potential in the practical world. Also, show some love by sharing this blog with your family and friends and helping us in our mission of spreading financial literacy. [/JUSTIFY] [HR][/HR] [JUSTIFY][url=https://solidecn.com/news]Visit solidecn.com[/url] [url=https://www.trustpilot.com/review/solidecn.com]Trust Score 4.9[/url][/JUSTIFY] [/QUOTE]
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