Three Outside Up

Identification

A bullish Engulfing pattern is followed by a white day whose close is higher than the second day.

The Psychology

In a downtrend or during a pullback within an uptrend, a bullish Engulfing pattern forms. By itself the pattern has moderate reliability as a reversal indicator, but when the it is followed by another white day (preferably on strong volume), the overall pattern becomes much more reliable.

The Three Outside Up may be a continuation of the bullish Engulfing.