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What Are the Three Black Crows?
Let me explain the Three Black Crows to you directly: it's a bearish candlestick pattern that points to a potential reversal of an ongoing uptrend. You'll see it on charts as three straight long-bodied candles, each opening inside the real body of the one before it and closing lower, which shows a solid downtrend taking hold. As a trader, you should watch for this alongside other indicators to verify those bearish signals and sharpen your strategy in choppy markets.
Understanding the Three Black Crows Pattern
This is a straightforward visual pattern, so you don't need complex calculations to spot it. It happens when bears overpower bulls over three trading sessions in a row. On the charts, it looks like three bearish long-bodied candlesticks with little to no shadows or wicks.
Usually, the session starts with bulls pushing the price higher than the prior close, but bears drive it down, closing near the low. That creates those short shadows. If you see this sustained pressure across three sessions, it's often the kickoff to a bearish downtrend.
How to Analyze Three Black Crows in Trading
Treat the Three Black Crows as a visual hint and back it up with other technical tools. The pattern's reliability hinges on how crisp it forms—ideally, those are long-bodied bearish candles closing at or near the period's low, with short or no shadows. Stretched shadows might just mean a temporary momentum shift before the uptrend resumes.
Volume boosts the pattern's accuracy: if the uptrend before it had low volume and the pattern hits with high volume, it suggests a real reversal from a weak bull push to a stronger bear move. Remember, it's more about the volume weight than the number of traders involved.
Comparing Three Black Crows and Three White Soldiers Patterns
On the flip side, the Three White Soldiers pattern shows up at the end of a downtrend and hints at an upward reversal. It consists of three long-bodied white candlesticks with short or no shadows, opening in the prior candle's body and closing higher.
Three White Soldiers flag a downtrend flip, just as Three Black Crows do for an uptrend. Apply the same checks for volume and other indicators to both for solid confirmation.
Challenges in Interpreting Three Black Crows
If the pattern causes a sharp drop, keep an eye out for oversold signals that could lead to consolidation. Use tools like the RSI—below 30 means oversold—or the stochastic oscillator for momentum checks.
Don't rely on Three Black Crows alone; pair it with other patterns or indicators for breakdown confirmation. It's visual, so interpretations vary on things like shadow length. Other signs, like breaking support levels, can mimic it and predict a downtrend, making combined analysis key for better trades.
Real-World Application of the Three Black Crows Pattern
Take the GBP/USD weekly chart in late May 2018: a Three Black Crows appeared, signaling a continued low trend. Analysts pointed to the steep prior uptrend, low wicks showing closes near lows, and the longest candle on day three as reasons it confirmed a downturn.
The Bottom Line
In summary, the Three Black Crows is a vital bearish formation warning of an uptrend reversal, marked by three long-bodied candles with minimal shadows as bears dominate. It's a clear sign, but confirm it with RSI or volume to dodge oversold traps and retracements. Its mirror, Three White Soldiers, does the same for downtrends, so always build in full analysis for your trading decisions.
Key Takeaways
- The Three Black Crows is a bearish visual signal for a potential uptrend reversal in markets.
- It includes three consecutive long-bodied candlesticks opening in the prior body's range and closing lower.
- Combine it with indicators like RSI for reversal confirmation.
- Its opposite, Three White Soldiers, signals a downtrend reversal.
- Volume and shadow details affect the pattern's reliability.
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