What is Three Outside Down: Bearish Reversal Pattern?

What is Three Outside Down: Bearish Reversal Pattern?

Three Outside Down Pattern is another name for the Confirmed Bearish Engulfing Pattern. It is a bearish reversal pattern. In this pattern, first candle is a small white candle, which closes near its high. Second candle is a long black candle, which completely engulfs the first candle, closes near its low, thus creating a bearish engulfing pattern. Third candle breaks the low of the second candle, and closes near its low.

Strategy: Short positions can be initiated once low of the third candlestick is broken