Berry, who plays off six, has shot two-over-par 74 on days one and two to give himself an excellent chance of representing Europe's in Friday's Van Horn Cup at Luffness.
The top two Europeans and the top two Americans after Thursday's final round will compete against one another the following day.
Tuesday's opening 74 was the Doncaster golfer's lowest round of his young career, but he looked on course to shatter that mark when he stood four under for the day through 13 holes on Wednesday.
He had birdied holes two, five, seven, 11 and 13, while dropping just the one shot at 14.
However, he dropped six shots on the final five holes and admitted that nerves had got to him.
"I'm a bit gutted, I think I was a bit nervous," he said. "That would've been my best score, getting to four under, but I just hit some bad shots.
"But I'm still in third place and I'm in the final group in the final round. I just want to get in the top two and then I will be in Friday's competition."
Berry is competing at the European Championships after winning the adidas golf Wee Wonders event on the Strathtyrum course last August.
Next month he will head to US Open venue Pinehurst, in North Carolina, for the 2016 world championship.
His handicap has fallen from 12 to six since his victory at St Andrews, and is set to go lower still following his opening rounds at Craigielaw.
His father, Scott, said: "Josh plays in men's medals and other men's tournaments at Doncaster and he doesn't get fazed at all, but this is a massive event and I think it just got on top of him.
"He only turned 11 last week and the two lads ahead of him are almost 12, so they a year above him at school and you can tell; they are a lot bigger.
"But he is doing fantastic to be up there and is in a great position going out in the final group."
India's Shubham Jaglan leads on three under with Denmark's Nicolai Spangenberg second five shots back and just two ahead of Berry.