Pattern Detail

Bullish Three Outside Up

Three-candle bottom: a bullish engulfing, then a third up candle that closes higher, confirming the reversal.

A real Bullish Three Outside Up on NQ daily bars, Jun 11, 2010. Price then followed through 3.5% over the next 5 bars. The bright candles are the pattern; the dimmed bars are surrounding context.
A real Bullish Three Outside Up on NQ daily bars, Jun 11, 2010. Price then followed through 3.5% over the next 5 bars. The bright candles are the pattern; the dimmed bars are surrounding context.
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How to read this

Everything here is in R, the setup's own risk. 1R is the distance from the entry (the pattern's closing price) to where it would be proven wrong — its lowest low over the 3 bars that form it. So "offered 2R" means price ran twice that distance in your favor at some point before the stop. It does not assume you took profit there: a target is a strategy choice.

Room offered (≥ 1R)

44.7%

Reliable

Offered at least 1× its risk before the stop, vs 42.8% for a random long entry (+1.9 pts).

Move size vs normal

1.11×

Realized range over the next 20 bars vs a random bar. Precedes a bigger move.

Typical room (20-bar)

1.13R

Average run in favor (capped at 3R), vs 1.10R for a random long entry.

Summary

Offered at least 1R of room 44.7% of the time vs 42.8% for a random long entry — a 1.9-point gap, wider than the ±1.0-point margin of error from chance, and it holds across the sample. A real, if modest, tendency to offer more room than the market alone.

Room offered, this setup vs a random long entry

Outcome This setup Random entry Edge
Offered ≥ 1R 44.7% 42.8% +1.9
Offered ≥ 2R 22.1% 27.3% -5.1
Offered ≥ 3R 11.1% 18.5% -7.4
Stopped < 1R 44.9% 53.6% -8.7
Went sideways 10.4% 3.6% +6.8

9,135 occurrences · 1,165,570 random-entry controls · 20-bar horizon

A three outside up is a bullish engulfing with a confirmation candle added. After a fall, a small down candle is swallowed by a larger up candle that engulfs it, the buyers taking over in one bar. Then a third up candle closes even higher. That follow-through turns a strong two-candle signal into a confirmed one: the engulfing showed the shift, and the third candle proves it stuck.

Three outside up is the confirmed bullish engulfing covered in Steve Nison’s Japanese Candlestick Charting Techniques (1991) and the broader candlestick literature.

How to spot it

  • The market is falling into the pattern.
  • The first candle is a down (red) candle that fits the decline.
  • The second candle is an up (green) candle that fully engulfs the first candle’s body.
  • The third candle is another up candle.
  • That third candle closes above the second candle’s close, confirming the reversal.

The dashed box on the chart above marks the three candles on a real occurrence, with the decline before and the move after.

The psychology

The small down candle still belongs to the sellers, but it is small, and that smallness already hints the selling is thinning. Then the up candle swallows it whole. In one bar, buyers retake everything the prior candle gave the sellers and close above where it began. Anyone who sold into that area is now looking at price back above their entry, and that pressure builds underneath the turn.

The third candle is the part that separates this from a lone engulfing. A two-candle reversal can be a flash that fades the next session. Here the third candle closes even higher, so the buyers who took control hold it and extend it rather than letting price slip back. The follow-through says the shift stuck: control has moved, and it stayed moved.

A confirmed turn still has to pay off, and the figures below measure how much room it tends to leave.

Does it actually work?

A pattern is a setup, not a trade, so the honest question is not “did it win” but “how much room did it tend to offer before it was proven wrong.” The tabs below answer that across five futures markets (Nasdaq, S&P 500, gold, crude oil, natural gas) and seven timeframes from one minute to one day.

For each occurrence we measure the room the move offered in units of the pattern’s own risk, then set it against what a random entry on the same market would have done. When the pattern offers more room more often than chance, that shows up as a real edge. When it does not, the page says so plainly.

Read it with the sample size in view. On the faster timeframes a pattern can fire thousands of times, enough to trust. On the daily chart it is far rarer, so treat those numbers as a hint rather than a verdict. Thin samples are flagged for you on the page.

How we measured it

  • Entry is the close of the final candle of the pattern.
  • One unit of risk, 1R, is the distance from that close down to the pattern’s invalidation point: the lowest low of the three candles that form it. If price trades through there, the setup is wrong.
  • We then follow the next 20 bars and record how far price ran in your favor, in multiples of that risk, before the stop was hit.
  • Every figure is set against a random entry on the same market and timeframe, so the market’s own drift is accounted for.
  • No profit target and no position sizing. Where you take profit is a strategy choice; this measures only the room the pattern tends to give.

What this page does not cover

  • Volume on the pattern’s candles.
  • Whether the pattern forms at a meaningful support level.
  • Pairing it with a trend filter or a confirming signal.
  • A profit target or position sizing. We use the pattern’s own invalidation point as the stop to define risk, but where you take profit, and how much you put on, are strategy decisions this page leaves to you.

Sample Bullish Three Outside Up Firings (20)

Based on data through Apr 29, 2026

Time Risk (pts) Room offered Result
Apr 28, 2026, 11:50 AM CDT 62.5 1.48R Ran ≥1R
Apr 28, 2026, 10:55 AM CDT 44 1.40R Ran ≥1R
Apr 27, 2026, 11:10 PM CDT 19.5 0.78R Stopped
Apr 27, 2026, 9:10 PM CDT 19.25 0.34R Stopped
Apr 27, 2026, 8:25 PM CDT 16.75 0.87R Stopped
Apr 24, 2026, 3:20 PM CDT 14.25 1.49R Ran ≥1R
Apr 24, 2026, 12:35 PM CDT 23.75 2.79R Ran ≥1R
Apr 24, 2026, 9:40 AM CDT 84.5 1.96R Ran ≥1R
Apr 24, 2026, 7:10 AM CDT 32.5 0.37R Stopped
Apr 23, 2026, 8:25 PM CDT 13 0.00R Stopped
Apr 23, 2026, 12:55 PM CDT 198.75 0.51R Flat
Apr 22, 2026, 7:55 PM CDT 20.25 0.09R Stopped
Apr 22, 2026, 12:05 PM CDT 47.75 0.94R Flat
Apr 22, 2026, 1:20 AM CDT 13.5 3.00R Ran ≥1R
Apr 21, 2026, 1:56 PM CDT 64.75 0.88R Stopped
Apr 20, 2026, 10:15 AM CDT 68.75 1.07R Ran ≥1R
Apr 20, 2026, 8:55 AM CDT 65 0.12R Stopped
Apr 20, 2026, 2:00 AM CDT 49 0.49R Stopped
Apr 19, 2026, 9:20 PM CDT 12.25 0.24R Stopped
Apr 19, 2026, 8:35 PM CDT 18 0.60R Stopped

Sample backtest

Real backtested runs of this pattern, with commissions and slippage. Open one for the full equity curve and metrics, or backtest it yourself on your own contract and dates.

Backtest this pattern

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