Question: What is the proper strategy when Three Inside Down pattern appears in Candlestick chart?
Here is an example of strategy when you see the appearance of the Three Inside Down pattern filtered by RSI at the overbought area, at the end of an uptrend.
Consider selling when the next candle falls below the low price of the Long Black Candle (third candle).
Consider placing a protective stop loss at the top of the pattern.
Take-Profit strategy is heavily dependent on the trading profile of each individual:
- Close 60% of the position when price travels 100% the length of the pips at risk.
- Close the remaining 20% when price reaches the 200% of the pips at risk.
- Move the protective stop-loss at the bottom of the Long Black Candle.
- Close the remaining 20% of the position when price reaches 300% of the length of the Long Black Candle or at the presence of a reversal candlestick or when price closes back above the SMA(50).
- Other combinations may be applied.