The Bearish Three Black Crows is a bearish reversal pattern consisting of three consecutive black candlesticks, each with a lower close and an open within the previous candlestick’s body. It is a Japanese candlesticks pattern used to predict the reversal of the current bullish trend. The pattern shows a shift in power from the buyers to the sellers, and it indicates a drop in the price unless a sign appeared to invalidate the bearish trend.
A good strategy to follow is to trade preferably after the formation of the first candlestick, where it covers the previous bullish candlestick, because at this point the bullish candlestick has already formed a Bearish Engulfing Pattern. Upon completion of the pattern, which means the closing of the third consecutive black candlestick, the trader can add to his position and trade with the trend. The other way is to trade after the complete formation of the Bearish Three Black Crows, the closing of three consecutive black candlesticks.
The Bearish Three Black Crows patterns are excellent set-ups to trade; the pattern ranks sixth out of 103 successful candlestick patterns and types, where first is best. This pattern is used often in Forex Trading Signals and Managed Forex Accounts.
The Three Black Crows pattern forms as follows:
- After an uptrend, there are three consecutive bearish candlesticks.
- The bodies of the second and the third candlesticks should be approximately the same size – if the third candlestick is visibly smaller than the preceding two candlesticks, this means that the sellers are not completely in control and may indicate weakness among the sellers.
- The candlesticks have small or no lower shadows.
Sometimes upon completion of the Bearish Three Black Crows, market participants who entered the market after the first candlestick book their profit, which will reflect on the chart with a small white candlestick, however, a break out from the low of the third candlestick should be expected. Sometimes the price continues to drop for a fourth day before showing the white candlestick on the fifth day.