Three Inside Up Candlestick Pattern Backtest Rules

Summary

This script identifies a three-candle bullish reversal setup. It looks for a bearish first candle followed by a smaller bullish candle contained within the first candle’s body, then a bullish third candle that closes above the second candle’s close and the first candle’s open. The pattern is highlighted on the chart, and the strategy code uses its detection to manage a position.

Despite the pattern’s bullish description, the implementation enters a short position when its conditions are met. It closes positions when the pattern state is absent and exposes configurable pip-based take-profit and stop-loss inputs. The document supplies no backtest results, instrument details, or evidence that the pattern predicts reversals. The source also cautions that it is educational and notes that it changes bar colors; its entry direction and exit handling merit careful review before interpreting any backtest.

Key ideas

• The setup uses three candles, beginning with a bearish candle and ending with a bullish close above specified prior levels.
• The second candle is required to form a bullish harami within the first candle’s range of bodies.
• The strategy enters short when the bullish reversal pattern is detected.
• The script includes adjustable pip-based profit and loss thresholds but provides no performance evidence.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.