The Three Black Crows is a strong bearish reversal candlestick pattern that signals a potential end of an uptrend and the start of a downtrend.
ðŠķ What is the Three Black Crows Pattern?
ð Pattern Characteristics:
- Appears after an uptrend or at the top of a bullish move
- Consists of three consecutive bearish candles
- Each candle:
- Has a long real body
- Opens within the body of the previous candle
- Closes lower than the previous candle
- Has little to no lower wick (showing strong selling pressure)
ð What It Means
- Momentum has shifted from bulls to bears
- Selling pressure is consistent over 3 sessions
- Signals strong potential reversal to the downside
ð ïļ How to Trade the Three Black Crows
1. Identify the Pattern
- Must appear after a clear uptrend
- The three bearish candles should be relatively similar in size
- Smaller or no lower shadows = stronger signal
2. Confirm the Signal
Before jumping in, confirm with: â
High volume on the pattern
â
Overbought conditions on RSI or Stochastic
â
Pattern forming near resistance
â
Bearish crossover on MACD
3. Entry Point
ð Aggressive Entry:
Go short at the close of the third candle
ð Conservative Entry:
Wait for a break below the low of the third candle, or a bearish follow-through candle
4. Stop Loss Placement
ð Set your stop loss:
- Just above the high of the first candle in the pattern
- Or above the most recent resistance level
5. Take-Profit Targets
ðŊ Aim for:
- Recent support levels
- Measured moves or swing lows
- Favor a risk-reward ratio of at least 1:2
ð§ Pro Tips:
- Most effective on higher timeframes (1H, 4H, Daily)
- Stronger when part of a confluence zone (resistance, fib level, etc.)
- Combine with trendlines, moving averages, or oscillators for added confirmation
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