Three Crows or Black Crows , is a bullish reversal pattern which occurs at the end of an uptrend. It indicates that there’s been a clear shift in balance from buyers to sellers.
How do you spot three black crows?
To look for this pattern, all you have to do is:
- Check whether a short term uptrend in progress.
- Look for a trend reversal with the formation of three red candles each with lower close
- Each of the red candles must close at or near its lows. Set a rule, you must check if the closing price is at least in the bottom 30% of the range for that day.
- Next, each subsequent candle should open within the previous red’s real body, but this overlap is not a rule. A candle that opens at or a little lower than the previous session’s real body is also valid.
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What’s happening in the market? How does this pattern form?
Three Black crows is the mirror opposite of the three white soldiers, which means it foretells the coming of lower prices and of weakness ahead.It is indicating strong selling by the bears.
What action to take in case of Three Black Crows
Since it is a bearish reversal candle pattern, you need to sell the third red candle. Place a buy-stop loss above the highest high of the last of the three red candles.