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Triple candlestick patterns: Understand Three Outside up and Three Outside Down Candlestick Patterns

• The outside three up/down candlestick patterns are variations of chart candle reversal patterns. They are usually used to indicate a trend reversal.
• The three outside up/down candlestick patterns are distinguished by one white or black candlestick immediately followed by two candlesticks of the opposite hue. 
• These varieties of the three outside patterns aim to read near-term changes in trader sentiment by leveraging the market’s psychology.

What is Three Outside Up Candlestick Pattern?
Three successive candlesticks form the three outside up pattern, which usually appears after a bearish trend. The movement of these candles always indicates whether or not a trend reversal is imminent.

A single bearish candle is followed by two bullish candles to form the pattern. For counter-trend trading tactics to work, accurate detection of this pattern is critical.

Formation
Below is the formation of the Three Outside Up Candlestick Pattern-

1. The market must decline for a three outside up pattern to appear.
2. The pattern’s first candle will be black, signifying a downward trend.
3. A large white candle will be formed next. It will be long enough for the first black candle to be completely contained within its true body.
4. The third and final candle, which indicates three outside up, must also be white. This candle, however, should close higher than the second candle. This shows that the downward trend is changing direction.

What Traders Interpret from a Three Outside Up Pattern
With the closure lower than the open, the first candle maintains the bearish trend, showing significant selling interest and building bear confidence. 

The second candle begins lower but quickly reverses, crossing through the first tick in a bullish showing. This price action raises a red flag for bears, signaling that those gains should be taken or stopped because a reversal is possible.

The stock continues to rise, with the price now above the first candle’s range, completing a bullish outside day candlestick. This boosts bullish sentiment and triggers buy signals, verified when the security makes a new high on the third candle.

Trading Example
One of the important characteristics of this technical indicator is that the size of the engulfing candlestick, which is the second of three, determines its power. The three outside up patterns is more prominent the larger the second candle. 

The smaller the negative downtrend becomes, the weaker its indication becomes. As the price movement increases with the second candle, bullish sentiments appear to be outnumbering bearish sentiments.
 

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What is Three Outside Down Candlestick Pattern

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.

 

Formation
Below is the formation of the Three Outside Down Candlestick Pattern-

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.

 

What Traders Interpret from a Three Outside Up Pattern

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.

 

Trading Example

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.

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.

 

Bottom-line

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ETHUSD - Upcoming merger of Ethereum networks supports quotes

The ETH token has added about 21% in value, significantly improving its position compared to the market leaders, who also showed growth during the last few trading sessions. The second cryptocurrency is supported by the upcoming transition of the Ethereum network from the Proof-of-Work (PoW) algorithm to Proof-of-Stake (PoS), the preparation for which is at the final stage. Earlier, the company's lead developer Tim Beiko published on the social network Twitter a plan for the merger of the old and new networks, scheduled for September 19, noting that this is not yet the final date. Nevertheless, the message aroused investors' interest in ETH and its price growth. The transition to PoS should ensure an improvement in the scalability of the network and a significant reduction in its energy consumption, in addition, the mining of the token will be reduced, which can become a catalyst for its growth rate. Some experts predict the movement of quotations up to 5K dollars per coin, but these calculations may be hindered by long-term negative factors associated with the continued increase in interest rates by the US Fed. Tightening monetary policy will further strengthen the US currency and put pressure on alternative assets, including digital ones.

Now the price is testing the 1500 mark, consolidation above which will allow the quotes to continue the upward trend to 1750 and 1875. The key for the "bears" is the level of 1250 (the middle line of the Bollinger Bands), the breakdown of which will ensure the return of the price to the mid-term side range and a decline to the levels of 1000.

Technical indicators do not give a single signal: the Bollinger Bands are directed upwards, the MACD histogram has moved into a positive zone, but Stochastic may soon leave the overbought zones.

Resistance levels: 1500, 1750, 1875 | Support levels: 1250, 1000, 875

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XRPUSD -Technical analysis

Currently, the price is testing its upper limit, consolidation above which will allow the cryptocurrency to continue moving to the area of 0.4150 (Fibo retracement 23.6%). Otherwise, the price will remain within the sideways range and resume its decline to the levels of 0.2930 and 0.2441.

Technical indicators confirm the high probability of the development of downward dynamics: the Bollinger Bands are horizontal, the MACD histogram is at the zero line, its volumes are insignificant, and the Stochastic has reached the oversold zone and is trying to reverse downwards. In general, further movement within the established lateral range is seen as the most priority scenario at the moment.   

Resistance levels: 0.3660, 0.4150, 0.4395 | Support levels: 0.2930, 0.2441, 0.1953
 

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How to use Bullish and Bearish Counterattack Candlestick Patterns

Reversal indicators are plenty when it comes to technical analysis and candlestick patterns. For example, the counterattack candlestick pattern is a trend reversal indicator that many traders employ to enter a positioning trade.

What are Counterattack Candlestick Patterns?
This trend reversal candlestick pattern, also known as the counterattack lines candlestick pattern, consists of two candlesticks moving in opposite directions. It can occur during an uptrend or a decline and is valuable for identifying trend reversals. The indication is regarded as a bullish counterattack pattern when it appears during a decline. Conversely, the indicator is known as a bearish counterattack pattern during an uptrend.

How to Interpret Counterattack Candlestick Patterns?
When you see the pattern in action, it becomes much easier to comprehend its meaning. For example, the bullish counterattack pattern can be seen here.

Take a look at this illustration. The bullish candle is colored white, while the bearish candle is colored black. The prices are clearly on the decline in this graph. Bears have a firm grasp on the market and have constantly lower prices.  This is demonstrated with the first black-colored candle. The white candle produces a ‘gap down’ in response to the trend’s significant selling pressure and continues to decline until it reaches the session’s lowest point. However, the bears lose pace at this point, and the bulls flood the market, lifting the price dramatically. Thanks to the bulls ‘ robust demand, the session closes positively at about the previous day’s closing point.

The prices are on an upswing in this candlestick chart. The bulls are a powerful force in the market, continually driving prices higher. The white-colored candle string demonstrates this. Due to the tremendous demand, the first black candle opens with a ‘gap up,’ implying that the price will continue to rise. However, the bulls lose steam at this point, allowing bears to enter.

The sellers then flood the market, driving the price down dramatically. The session closes unfavorably at about the point of the previous day’s closing due to the bears’ heavy selling push.

How to use Counterattack Candlestick Patterns?
It’s one thing to notice the trend. However, using the detected pattern to enter a trade is different. As a result, before you embark on a trade based on the counterattack lines candlestick pattern, bear the following points in mind.

> To begin, keep an eye out for a strong trend. It could be either a bullish or bearish trend.
> Once you’ve determined the trend, look for a candle that opens with either a ‘gap up’ or a ‘gap down.’ The apertures should follow the current fashion.
> Pay attention to how this candle moves. The movement of the candle should be in the opposite direction of the current trend.
> Once that condition is met, make sure the candle in the middle is moving.

If all of the preceding conditions are met, a pattern can be dubbed a counterattack lines candlestick.

> Once the pattern has been correctly spotted, it is best to wait for a confirmation candle before entering a trade. For example, in the case of a bullish counterattack pattern, you should only consider entering a trade if the candle that emerges after the pattern is also bullish. On the other hand, the bullish reversal is considered to have failed.

Notice how a bearish candle follows the bearish counterattack candlestick pattern? This candle verifies the trend reversal and should be used to enter the market.

Bottom-line
Because the counterattack lines candlestick pattern is so specialized and uncommon, it’s best to pair it with other technical indicators before making a trade choice. This way, the odds of your trade taking an unexpected turn are reduced.

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Silver - demand for silver is actively declining

To assess the current trends in the market, it is enough to refer to the statistics on the demand for the assets of the metal group on the commodity exchange. According to the latest report from the US Commodity Futures Trading Commission (CFTC), investor interest in silver contracts is so low that it could fall into negative area for the first time in three years by the end of this month. The last time such a strong negative trend was observed in the early summer of 2019, when metal quotes were around 15 dollars per ounce. It follows from the statistics that last week the number of net speculative positions on the asset was fixed at around 3.2K.

 

 

Quotes are gradually decreasing and setting new annual lows. Technical indicators maintain the global sell signal: the range of EMA fluctuations on the Alligator indicator expands in the direction of decline, and the histogram of the AO oscillator is forming descending bars, being in the sales zone.

 

Support levels: 18.40, 16.81 | Resistance levels: 19.30, 20.63

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(RSI) Range Shift- A Simple but Effective Trading Strategy

The Relative Strength Index (RSI) is the most popular technical indicator among traders worldwide. It was created in the 1970s by Wells Wilder. In his 1978 book New Concepts in Technical Trading Systems, Mr Wilder advised that the indicator’s default setting be 14 days (half-moon cycle). The RSI is commonly used to determine overbought and oversold levels. Divergence, Reversal, and Failure Swing are other terms associated with using RSI. However, Andrew Cardwell, commonly known as Dr RSI, discovered the Range Shift idea. Furthermore, he found that the RSI indicator may be applied to trending and non-trending markets.

What is the RSI Range Shift concept?
RSI Range Shift is a phenomenon that occurs when the RSI indicator ‘shifts’ from one specified range to another in response to changes in the price movement of an underlying asset. There are five different types of RSI ranges.

• Super Bullish Range-60-80
• Bullish Range-40-80
• Bearish Range-20-60
• Super Bearish Range-20-40
• Sideways Range-40-60

Trading Examples
1. Super Bullish Range
In this situation, the RSI refuses to fall below 60 and seeks support near 60. RSI tends to swing between 60 and 80 during this highly bullish era. Consider the following Reliance example.

2. Bullish Range
When a stock is rising, the RSI will not fall below 40. Instead, it looks for help around the level of 40. For example, see the Lupin chart below, where the RSI refused to move below 40 and fluctuated between 40 and 80.

 

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USDCHF, H4
On the four-hour chart, the Three "bearish" steps downwards trend continuation pattern is formed, which signals increasing sales. However, the asset has also formed the Doji rickshaw model. This figure means that the forces of "bulls" and "bears" are equal at the moment, but its appearance in a local base can mean both a reversal of quotes up and a continuation of the downward movement. In the current situation, the decrease to the support level of 0.9538 seems more likely, which breakdown will allow sellers to move into the range of 0.9410–0.9167. An alternative option is possible after the price breaks the upper border of the trend channel and the resistance level of 0.9667 with the growth target at 0.9828–1.0032.

USDCHF, D1
On the daily chart, at 0.9828, Shooting star and Hanging man reversal patterns are forming, from where the asset rushed down. Also, a series of Three "bearish" steps candlestick analysis patterns have formed, which are models for the continuation of a downtrend. Probably, the asset is trying to test the key support level of 0.9538, and if the "bulls" fail to hold it, then the movement will continue to the area of 0.9410–0.9167.

Support levels: 0.9538, 0.941, 0.9167 | Resistance levels: 0.9667, 0.9828, 1.0032

 

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XAUUSD - Investors are actively reducing short positions

The current growth was the reaction of traders to the slowdown in the USD dynamics, which has been putting pressure on the quotes of the precious metal for two months now. The proximity of the US Federal Reserve meeting, scheduled for Wednesday, July 27, provoked an outflow of investor capital into conservative gold, which traditionally acts as a safe-haven asset in situations of uncertainty. Of course, if the interest rate is increased by 75 or even 100 basis points, a short-term decline in the trading instrument is inevitable, but after that, the global correction may resume.

 

 

On the weekly chart, the formation of a long-term downward channel continues, with dynamic boundaries of 1800.0–1650.0. The price is trying to start a new wave of growth. Technical indicators are holding a sell signal, which is slightly weakening: fast EMAs on the Alligator indicator have begun to approach the signal line, and the AO oscillator histogram is forming new rising bars in the sell zone.

 

Support levels: 1695, 1650 | Resistance levels: 1741, 1786

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USDCAD: the pair is down 2.3% from July highs

On July 13, the regulator raised the interest rate by 100 basis points to 2.5%. However, the markets expected conflicting inflation figures. According to macroeconomic statistics, CPI was recorded at 6.2% YoY, higher than the analysts' forecast of 5.9% and the previous value of 6.1%, but standard inflation slowed down in June. The indicator was lower than the forecast of 0.9% MoM and the May value of 1.4%, probably due to the seasonal factor and the adaptation of enterprises to the new conditions of monetary policy.

The long-term trend in the USDCAD pair remains upward. The key support for the trend is at 1.2835, and market participants tested it last Friday, which resulted in quotes rising to the 1.2938 area. Accordingly, for the upward dynamics to continue, buyers need to break through it. Otherwise, the USDCAD pair is expected to decline and renew the July low of 1.2835.

The mid-term trend changed to a downtrend last week. Traders broke through the key trend support 1.2996–1.2974. The sell target zone is 1.2777–1.2756. The key trend resistance is shifting to 1.3064–1.3042. If the participants overcome it within the correction, it will be possible to consider short positions with the first target at the last week's low.

Resistance levels: 1.2938, 1.3065, 1.3157 | Support levels: 1.2835, 1.2525

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What is Moving Average Convergence Divergence?

One of the most often used technical analysis indicators is moving average convergence divergence.  It’s a trend-following momentum indicator, which means it looks at the momentum of an asset to see whether it’s trending up or down. It may be used to generate trade signals and discover trading opportunities. The Moving Average Convergence Divergence indicator is shown in a separate window beneath the chart. It has the appearance of a histogram with an auxiliary line. 

The divergence of two moving averages is depicted in the histogram. The histogram bars increase longer as one travels away from the other; the bars get shorter as the moving averages get closer. Rapid movements will show up as long bars in the MACD histogram, whereas flat will show up as short bars. The default values for the indicator are 12,26,9. However, it’s worth noting that many traders confuse the indicator’s two lines with simple moving averages. 

Remember that the lines are exponential moving averages, which will react more strongly to recent price movement than a standard moving average (SMA). Thus, the MACD lines are represented as 12-period EMA and 26-period EMA. 

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The ETHUSD pair continues to trade within a wide long-term downward channel. However, over the past two weeks, the cryptocurrency has shown significant growth, adding about 66%, and consolidated at 1660. However, the quotes failed to stay in this area and resumed the decline.

For the development of downward dynamics, the digital asset needs to fall below the support zone of 1375 − 1345 (the middle line of Bollinger bands). In this case, the downside targets will be 1250 and 1125, and 1000. The key “bullish” level is 1625, the breakout of which will allow quotes to continue moving to the area of 1750, 1885 Fibonacci correction 38.2%).

Technical indicators do not give a single signal: Bollinger bands are directed upwards, Stochastic reversed downwards, while the MACD histogram is stable in the positive zone. Given the long-term trend, a continuation of the price decline soon seems to be a more likely scenario.

Resistance levels: 1500, 1625, 1750, 1885 | Support levels: 1345, 1250, 1125, 1000

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AUDUSD - Inflation in Australia may accelerate

The AUDUSD pair started the week with an upward movement and is currently testing the level of 0.6958. However, consolidation above it seems less likely, as investors refrain from opening new trading positions, waiting for two key releases on Wednesday – the publication of inflation data in Australia and the decision of the US Federal Reserve on the interest rate.

Thus, Q2 CPI is likely to be poor: the indicator will consolidate around 6.1–6.3% YoY, which is twice the target of the Reserve Bank of Australia (2.0–3.0%) and thus will reach the high since 1990. Implementation of the forecast or its exceeding will confirm the fears of the head of the regulator, Philip Lowe, who recently stated that “psychological inflation” is forming in the country when consumers rush to spend available capital, expecting further price increases, which only exacerbates the negative dynamics, which, in turn, could push agency officials to accelerate the pace of interest rate adjustments to 75 basis percentage points, increasing the risks of the national economy going into recession.

The trading instrument is within the long-term downward channel, and now the price is testing 0.6958, consolidation above which will allow quotes to strengthen to the area of 0.708. Otherwise, the price decline will resume to 0.6835, 0.6713. Technical indicators do not give a single signal: Bollinger bands are horizontal, Stochastic is leaving the overbought zone, forming a sell signal, and the MACD histogram is preparing to move into the positive zone.

Resistance levels: 0.6958, 0.708 | Support levels: 0.6835, 0.6713, 0.6591