What Are the Three Black Crows?
Three black crows is a term used to denote a bearish candlestick pattern that may indicate an uptrend reversal. Candlestick charts show the opening, high, low, and closing prices for a given security on a given day. For equities that are ascending, the candlestick will be white or green. As they descend, they turn black or red.
The black crow pattern with three consecutive long-bodied candlesticks that opened within the actual body of the preceding candle and closed below the preceding candle. As confirmation of a reversal, traders frequently employ this signal in conjunction with other technical indicators or chart patterns.
Three Black Crows are Described
Three black crows constitute a visual pattern, therefore spotting this indicator does not require any specific computations. Three successive trading sessions in which bears surpass bulls constitute the three black crows pattern. On price charts, the pattern appears as three bearish long-bodied candlesticks with short or nonexistent shadows and wicks.
In accordance with the customary appearance of three black crows, the bulls will enter the session with the price marginally higher than the previous close, but the price will be pushed lower throughout the session. Under pressure from the bears, the price will close near the session low.
This trading move will result in a shadow that is either very brief or nonexistent. Traders frequently perceive this prolonged downward pressure over three sessions as the beginning of a bearish downturn.
Images provided are not current and any securities are shown for illustrative purposes only.
Restrictions on the Use of Three Black Crows
Rather than relying solely on the three black crows pattern to confirm a breakdown, the majority of traders look to other chart patterns and technical indicators. As a visual pattern, it is susceptible to interpretation, such as what constitutes a suitably brief shadow.
In addition, further indications will reflect a true three black crows pattern. For instance, a three black crows pattern may contain a breakdown from crucial support levels, which could independently foretell the start of a medium-term slump. Using extra patterns and indications may potentially increase the likelihood of a successful trade or exit strategy.
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