Three Inside Down = Play Defense

Today confirms that yesterday Bullish Harami is not so bullish after all; instead today is a day to play defense.  The Three Inside Down is a candlestick pattern that points to a possible bearish stance.

Take a look at the daily $SPY chart below:

SPY_Daily

Now take a look at the primer on Three Inside Down below:

Bearish Three Inside Down Pattern


BEARISH THREE INSIDE DOWN

Type: Reversal
Relevance: Bearish
Prior Trend: Bullish
Reliability: High
Confirmation: Suggested
No. of Sticks: 3

 

Definition:             Get the highest rated stock from Americanbulls for this pattern >>>The Bearish Three Inside Down Pattern is another name for the Confirmed Bearish Harami Pattern. The third day confirms the bearish trend reversal.Recognition Criteria:1. Market is characterized by uptrend.
2. We see a Bearish Harami Pattern in the first two days.
3. We then see a black candlestick on the third day with a lower close than the second day.
Explanation:The first two days of this three-day pattern is a Bearish Harami Pattern, and the third day confirms the reversal suggested by Bearish Harami Pattern since it is a black candlestick closing with a new low for the three days.Important Factors:The reliability of this pattern is very high, but still a confirmation in the form of a black candlestick with a lower close or a gap-down is suggested.

***

At this point, a more cautious and defensive stance is warranted for those who are heavily long.

I’m currently sitting on 47% cash.

Be safe!

My 2 cents.



Categories: SPY

Tags: , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: