Candlesticks: Three Black Crows
Three black crows is a bearish reversal pattern that forms with three consecutive long black candlesticks. After an advance, the three black crows pattern signals a change in sentiment and reversal of trend from bullish to bearish. Further bearish confirmation is not required, but there is sometimes a test of resistance established by the reversal.
Three Black Crows Bearish
Pattern: Reversal
Trend: Bearish
Reliability: High
How to Identify it
· Three black days occur, each with a close below the previous day
· Each day opens within the body of the previous day
· Each day closes near or at its lows
What it Means
In an uptrend three long black days occur with consecutively lower closes. This pattern suggests that the market has been at a high price for too long, and a reaction at the very minimum and a reversal possibly is coming.
The following chart of the Nifty shows what happened after the appearance of The Three Black Crows.
The pattern was visible when the third candlestick was formed with a low of 1140, in early March 2002. Since then the Nifty entered a bear market and made a low of 1020 in end of May 2002.
CONTEXT
Technical indicators and patterns should not be viewed in isolation.
Three black candlesticks can become a reversal pattern called ‘Three Black Crows’ ONLY if these black candles appear after a sustained up move. The context for this pattern is therefore the presence of a sustained up move. If three black candles appear in a chart that may be range bound, or may already be in a downtrend, the candles do not form the ‘Three Black Crows’ pattern. The context should be clearly seen. Here, the context is: a sustained up move.
You will find that this is really a rare pattern once you are strict about the context. Thus, when it does appear, we should respect it.
