Saturday, July 13, 2024

Three Black Crows

The Three Black Crows pattern is a bearish reversal pattern consisting of three consecutive bearish long candlesticks that trend downward like a staircase.

This candlestick pattern requires that each of the three candlesticks should be a relatively long bearish candlestick, with each candlestick opening lower than the previous candle’s open.

This is a trend reversal pattern that should only be considered when it occurs within an established uptrend.

Three black crows usually indicate weakness in an established uptrend as well as a possible downtrend.

Three Black Crows

In the book “Japanese Candlestick Charting Techniques,” author Steve Nison states that “The Three Black Crows may be useful to long-term traders.”

Accreditation standards

To identify the three black crows pattern, look for the following criteria:

  1. There should be a general upward trend.
  2. There must be three consecutive long candlesticks.
  3. The opening price of each candle must be lower than the previous day’s opening price.
  4. Ideally, it would open in the middle price range of the previous day
  5. Each candle must gradually close downward, establishing a new short-term low.
  6. The lower wick of the candle is very small (or non-existent).

meaning

The bulls have been winning, but now the bears are driving the price down.

For three consecutive trading days, bears have gone down these steps, signaling a trend reversal.

Continued downward movement indicates the strength of the bear market.

Negative market sentiment is driving prices lower and this strong reversal confirms that the uptrend is over.

Trading Tips

Pay attention to the length of the candlestick.

The second and third candles must be approximately the same size to confirm that the bears are firmly in control.

If the third candle is significantly smaller than the other candles, it indicates weakness and the pattern is less reliable.

The Three Black Crows candlestick pattern is the opposite of the Three White Soldiers pattern, which is a bullish reversal pattern.

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