The Three Black Crows Forex Candlestick Patterns

The Three Black Crows Pattern

Three black crows are a visual pattern, meaning that there are no particular calculations to worry about when identifying this indicator. The three black crows pattern occurs when bears overtake the bulls during three consecutive trading sessions. Forex Candlestick Patterns

How do you trade 3 black crows?-Forex Candlestick Patterns

First, there should be a prevailing uptrend in progress. Second, there must be three long and bearish (i.e., black or red) candlesticks in a row. Third, each of those candles must open below the previous day’s open. Ideally, it will open in the middle price range of the previous day.

The Three Black Crows pattern is the opposite of the Three Advancing White Soldiers pattern. The Three Black Crows pattern is a bearish reversal pattern that consists of three bearish candlesticks that are ominous and dark in color, hence the name. This is a moderate trend reversal pattern that should only come into consideration when it appears in a rally or an established uptrend. The Three Black Crows usually indicates a weakness in an established uptrend and the potential emergence of a down trend. Forex Candlestick Patterns

Each of the three candlesticks in the Three Black Crows pattern should be relatively long bearish candlesticks with each candlestick closing at or near the low price for the period. Each successive candlestick should mark a steady decline in price and should not have long lower shadows or wicks. Preferably, each of the three candlesticks should open within the real body of the preceding candlestick in the pattern but this is not essential. When this pattern appears in an uptrend, it indicates the potential weakening of the trend and a possible trend reversal. However, if the three candlesticks are over extended and make significant price declines, you may need to be wary of oversold conditions. Forex Candlestick Patterns

Meaning

So what does all this mean? After a period of power, the bulls’ strength has waned and the bears are pushing the price downward. For three successful days, they march down those steps, creating a firm reversal. The continual downward movement signifies the vigor of the bears. The negative market sentiment is pushing the price downward, and this strong reversal (shifting from a bull market to a bear market) confirms that the upward price movement has ended. The Three Black Crows pattern is most useful for long-term traders. Forex Candlestick Patterns

To better understand the Three Black Crows you’ve spotted, keep an eye on the candles’ lengths. The second and third candles must be approximately the same size, to show that the bears are firmly in control. If the third candle is clearly smaller than the others, this indicates weakness and the pattern is not as reliable as it might have been otherwise. Forex Candlestick Patterns

Formation

As we mentioned above, the Three Black Crows form a sort of staircase that leads downward, forming over three trading sessions. If you think you’ve spotted this candlestick pattern, look for the following criteria:

First, there should be a prevailing uptrend in progress. Second, there must be three long and bearish (i.e., black or red) candlesticks in a row. Third, each of those candles must open below the previous day’s open. Ideally, it will open in the middle price range of the previous day. Fourth, each candle must close progressively downward, establishing a new short-term low. Fifth and finally, it is important that the candles have very small (or nonexistent) lower wicks.

If you’ve spotted what appears to be the opposite of the Three Black Crows (three long-bodied, white candles that are moving progressively upward), you probably have Three White Soldiers on your hands. This signal indicates a reversal from a bear market to a bull market.

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Chart Example

The Three Black Crows can be seen in the shaded area on the following 15-minute Euro/USD Forex chart. The Three Blck Crows were made from a double tops level at around 1.30249 that was made at 2:15 AM and at 11:00 AM on May 14, 2013. Forex Candlestick Patterns