After an established downtrend, day-one continues the trend with a red candle. Day-two is a long blue day that engulfs the body of the first day, closing well above the previous days open. The third day is a blue day with an even higher close than the second day.
The Bullish Three Outside Up pattern is one of the more clear-cut three day bullish reversal patterns. The formation reflects buyers overtaking selling strength, and often precedes a continued rally in price. In fact up to day-two we have a bullish Engulfing Pattern, itself a strong two-day reversal pattern.