Three Black Crows
Tue, Apr 15The Three Black Crows pattern is a bearish reversal formation characterized by three consecutive long bearish candlesticks that decline in a stair-step manner.
This candlestick pattern requires that each of the three candlesticks be relatively long and bearish, with each one opening lower than the previous candle's opening price.
It is a trend reversal pattern that should only be taken into account when it appears during a well-established uptrend.
The Three Black Crows typically signal a weakening of the current uptrend and the potential onset of a downtrend.
In his book, Japanese Candlestick Charting Techniques, author Steve Nison states, “The three black crows would likely be useful for longer-term traders.”
To identify the Three Black Crows pattern, look for the following criteria:
- There should be a prevailing uptrend in progress.
- There must be three consecutive long bearish candlesticks.
- Each of these candles must open below the previous day's opening price.
- Ideally, it will open within the middle price range of the previous day.
- Each candle must close progressively lower, establishing a new short-term low.
- The candles should have very small (or nonexistent) lower wicks.
The bulls have been in control, but now the bears are driving the price downwards.
For three consecutive sessions, the bears descend those steps, indicating a trend reversal.
The ongoing downward movement demonstrates the strength of the bears.
The negative market sentiment is pushing prices lower, and this strong reversal confirms that the uptrend has concluded.
Pay attention to the length of the candlesticks.
The second and third candles should be approximately the same size to confirm that the bears are firmly in control.
If the third candle is noticeably smaller than the others, it indicates weakness, making the pattern less reliable.
The Three Black Crows candlestick pattern has a counterpart known as the Three White Soldiers, which is a bullish reversal pattern.
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