What does a black crow mean? Learn everything about the Three Black Crows Candlestick

Have you heard about the Three Black Crows Candlestick? Watch our latest video to learn about a popular trend reversal strategy, used by many traders

The Three Black Crows Candlestick – what to look for in a chart

Hello, Traders! Today we’re going to go over another Candlestick strategy, in this case, “Three Black Crows” strategy’s a popular trend reversal strategy, used by many traders to identify when a market is turning down. This is a pattern that can only be used when we identify an uptrend, which means that ultimately we are looking for an uptrend to turn into a downtrend. So, the first step to identify this pattern on a chart is you’re looking for an uptrend. Here, we have a clear uptrend, we create a new high and then, as a second step we must find three long and bearish red candles in a row, so three consecutive along bearish candles. And, in this case, it’s four, so the more the better, and these four candles actually only just add more strength to the reversal pattern. The third rule is not so important as the second one. The second one is a must. Of course, we must have at least three long red candles, but the third rule, it says that the candles have small lower weaks. So, these weaks should not be long, for example, as this one. Look at this long weak, which means that the price should close near the lows that created. What happens here is, we have an uptrend, we have four long candles, we close at the low, this is an indicator to the traders that the market is reversing and from bull market you’re entering bear market and then you’re into a short sell the rallies of form and then you look for any rally to sell and look for the new lows. This is a Dollar/Yen daily chart. It is important to say that this strategy is mostly used for long term traders since we’re looking for a confirmation that the upward move has ended and then, we are entering the down move. Of course, sometimes it’s only a short-term move. Sometimes it’s much longer, in this particular case we are talking about a huge downward move that more or less, is 1200 pips from this high to this low.

A second example I want to show you is the Euro/Dollar daily chart. Again, clear uptrend. This is a very good example, because here you also have, look this uptrend, three red candles. However, look at the candles, these are not really bearish candle, this is more indecision time for traders, hence, this is not the pattern that we are looking for. Here, it can also be, you can see that this set pattern, that we’re looking for, is an uptrend followed by three red candles. However, we want to find at least, out of these three candles, at least two must have long bodies. Here, this is not really a long bearish candle. And then, finally, we have one, two, three and out of these three, we have two extremely long red candles, look at the first and the second one. Only the first and the second are 300 Pips move, then also the price fell down 300 Pips in two consecutive days, which meant that we are now looking for the bears to have control and we are looking to sell any rally and is actually what happened. Look, we created a low with the third candle, we had a slight correction, but the correction was sold two times immediately. You see two long upper weaks here, in these two candles, and then we create a new low. So, from this high to this low, we are talking about 600 pips move. Again, this pattern works best on the higher time frames, at least daily. So, we’re talking about daily, weekly, sometimes even monthly.

And the third chart I want to show you is a price action on a weekly chart. An uptrend, here we have three long candles, bearish candles, from the top. We try to recover, but simply these three bearish candles are too much to handle for bulls and this gets sold. So, from this slight left recovery at 1.26, we push down to 1.2250, so we push 350 pips lower. So, we are integrating this into our daily trading plan, simply by saying, okay, we have reversed, we’re not buying this anymore as we did in the uptrend, but actually we are selling the rallies and here if you saw this rally because the price corrected from 1.2350 to 1.26, you could have earned some very good profits.