Unique Three River Bottom

The unique three river bottom is a bullish candlestick pattern that helps to determine the ending of a downward trend. Basically it confirms the harami.

This pattern consists of three different days. The first day is a large down day which shows that the bears are still in control.

The second day the stock opens in the middle of the first candlestick and is unable to make any big downward advances. This shows that the bears were unable to push the stock down lower and they may be getting weaker.

The first two days form a harami which is a bullish indicator by itself and indicate that the bears in the market (at least in the short term) have lost a lot of their momentum and the stock may be setting up for a upward push.

The third day the stock opens lower and pushes up. This day the stock is unable to push higher than the last day.

Why is the Unique three river bottom a bullish pattern? When the stock forms the harami with the first two days it already signals that the bears are getting weak. The third day confirms it by pushing the stock upward.

Professional traders will confirm this indicator by using it along with other indicators like volume, support and resistance, or an oscillator. They will also use some sort of risk management to make sure they are still in a good condition if the pattern does fail to turn around.