Signal Type: Reversal
Bias: Bearish
Inbound Trend: Bullish
Reliability: 7.8 / 10
Pattern Definition
Found during an uptrend, the Bearish Three Black Crows
pattern is a strong indicator of a coming reversal in trend. Consisting of three
long black (bearish) candlesticks, this pattern resembles a descending
staircase. With each candle, a gap up from the previous day's close, with the
open well within the previous candle's real body. However, price quickly
retreats, and closes well below the previous days close. A final characteristic
is that the close each day should come at, or near, the low of the day.
Psychology
The appearance of three black crows patterns indicates a market has been too
high for too long, and the market is approaching, or has reached a top. A clear
and decisive move to the downside is reflected by the first candlestick, which
gaps up like a shooting star, but then quickly moves down and closes at or near
the low of the day. The bulls attempt to regain control of the market, as each
subsequent day gaps up at the open, but profit taking quickly gives way to full
bearish sentiment, and the market heads lower.
Trading The Three Black Crows Candlestick Pattern
- The opening price of days 2 and 3 must fall anywhere within the previous
days candle- However, ideally the open should be in the bottom 1/3 of the real
body of the previous days candle
- However, ideally the open should be in the bottom 1/3 of the real
- Long bodied candles improve the projected size of the reversal
- Wait for confirmation of this pattern.
- A bullish breakout above the high of the first day indicates a
failure of this pattern. In this instance, price tends to shoot higher
Very quickly - confirmation would be price gapping or moving below the close of the
third candlestick
- A bullish breakout above the high of the first day indicates a
Running The Stock Screen
show stocks where pattern is Bearish Three Black Crows
and price is between 5 and 50
and average volume(30) is above 250000
Popularity: 5% [?]
