I'm currently working on this pattern myself... almost done- it's quite big!!! Anyway, yes- the bolded dcs' go into the space... the ch 3 acts as the first dc. See, you're making a little point with the 2dc, ch2, 2dc. You're going to do that whole bit into the space. I had the basket problem myself... it is possibly your stitches are too tight, or you need to go up a hook size. Once you get going on this, you'll be cruising along. Good luck and hope that helps!