- Sentiment: Bearish
- No. of candles: 3
- Direction: Reversal
What Is The Three Black Crows Japanese Candlestick Pattern?
The Three Black Crows pattern is a bearish reversal pattern that typically forms after an uptrend.
The Japanese candlestick pattern consists of three long black (bearish) candles that close at or near the day’s low.
Each candle should open within the real body of the previous candle, creating a visual pattern of three black crows in a row.
What Is The Psychology Behind The Three Black Crows Pattern?
The Three Black Crows pattern reflects a strong shift in market sentiment from bullish to bearish.
During the period of the first black candle, sellers start to enter the market and push the price lower.
This selling pressure continues during the periods of the second and third candles, resulting in a strong bearish trend.
The fact that each candle opens within the previous candle’s real body indicates a lack of buying pressure, with sellers taking control and pushing the price lower.
Japanese Candlestick Charting Techniques, Second Edition
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To trade the Three Black Crows pattern, wait for confirmation by a subsequent bearish candle or another technical indicator.
The sell trigger occurs when the price moves and closes below the low of the third black candle, confirming the pattern.
Place a stop loss order above the high of the third black candle to protect against potential false breakouts or reversals.
As the price moves in your favor, consider using trailing stops or other risk management techniques to lock in profits and minimize potential losses.
Additional Tips
While the Three Black Crows pattern can be a reliable bearish reversal signal, it is essential to use it in conjunction with other technical indicators and chart patterns to confirm the trend change.
Additionally, be aware of the overall market context and consider factors such as support and resistance levels, as well as the strength of the prevailing trend.
Keep in mind that no single pattern can guarantee a trend reversal, and proper risk management is always necessary.
Continue to learn about Japanese candlesticks through books, such as Steve Nison’s “Japanese Candlestick Charting Techniques” and “Beyond Candlesticks.”