The Three Black Crows pattern, or Three Black Crows, is a pattern consisting of three bearish candles appearing consecutively on the chart. Often seen after a series of price increases, this pattern is a sign that a trend is likely to reverse. Understanding the meaning, and characteristics as well as how to trade with Japanese candlestick patterns will help traders be more confident and proactive when detecting Japanese candlestick patterns on the chart. In this article, Forex Trading will provide detailed information about the 3 black crows candle pattern to help you better understand it, so let’s follow along!
What is the concept of 3 black crows candle pattern?
Three Black Crows pattern, also known as three black candlesticks. It is a Japanese candlestick pattern consisting of three consecutive bearish (red) candles. Each candle in this pattern usually has a closing price almost at the low of that candle and an opening price almost equal to the closing price of the previous candle.
This pattern often appears at the end of an uptrend and is a sign that a strong and reliable trend reversal is likely. It is considered an opposite candlestick pattern to the Three White Soldiers Pattern, or three white soldiers candlesticks.
Identifying characteristics of the 3 crows Japanese candlestick pattern
When the market is volatile traders look for signs of a change in trend. 3 black crows candle patterns became an important highlight. It is not only to recognize price reversals but also to determine the golden time for trading orders.
See more: Analyze & forecast trend effective candlestick pattern
Easy-to-recognize features of the 3 black crow candlestick pattern
First of all, traders need to recognize this pattern on the chart by identifying the following characteristics:
- The 3 black crows pattern consists of three consecutive bearish candles, with long bodies and short whiskers. The first candle is a bearish candle, showing the control of sellers in the market. It effectively pushes prices down
- The second candle is also bearish and has a larger body than the first candle. This candle closes close to the lowest price, usually without an upper wick
- The third candle is also a red bearish candle. It is similar in size and also usually does not have a wick
- The opening price of the next candle must be greater than or equal to the closing price of the previous candle
- The 3 black crows pattern often appears near the end of an uptrend or during the upward correction phase of a downtrend. It signals a reversal from bullish to bearish
The difference between 3 black crows candle pattern and 3 white soldiers
The pattern of three white soldiers is completely opposite to the pattern of three black crows. Usually appears near the end of a recession and predicts a possible reversal to recovery. Three consecutive rising candles, with long bodies and little or no shadows. It is a typical manifestation of this model. According to the candlestick model, the closing price is usually the highest price in the trading session. The opening price is usually equal to or close to the closing price of the previous candle.
Three black crows symbolize the reversal of the uptrend. While the three white soldiers are just one example of a pattern indicating a reversal of a downtrend.
Instructions on how to trade 3 black crow candle pattern
The 3 black crows candlestick is often used as a reversal indicator. Create counter-trend trading opportunities. However, regardless of which trading method you use. The most important thing is to determine the entry point, set stop loss, and take profit appropriately. Below, Forex Trading will guide you through methods for trading this pattern.
Simple candlestick pattern trading method
A popular way to trade the 3 Night Crows candlestick pattern is to open a SELL order as soon as the pattern is completed.
- Step 1: Identify the trend
First, identify the main trend of the market. The 3 black crows pattern often appears at the top of an uptrend or in a sideways market area. You can use tools such as trend lines, price channel lines, and moving averages (MA). Or it is analyzed on larger timeframes to do this
- Step 2: Determine the signal when a trend reversal appears
Next, it is necessary to accurately identify the 3 black crows candlestick on the chart. To increase your chances of success, make sure that the uptrend has begun to weaken. This can be seen through the continuous failure to create higher highs as well as lower lows than before. The pattern is more effective if it appears in a resistance or buying zone.
- Step 3: Open an order
Entry point: You can place a SELL order at the closing price of the bearish candle. After the Ichimoku candlestick is complete, or a few pips below the third candle.
Stop loss and take profit: Set a stop loss order a certain number of pips away from the nearest peak. Then take the profit at the resistance level or at the R: R ratio you set.
Method with the RSI indicator in the Japanese candlestick pattern
To increase the likelihood of success and reduce risks when trading the Three Black Crows pattern. Traders should combine it with technical indicators such as RSI, MACD, SMA 30, Stochastic, ADX, or Bollinger Bands.
Below, we will show you how to combine the 3 black crows model with two popular indicators, RSI and SMA 30:
Combined with the RSI indicator:
When using the RSI indicator, a break above 70 indicates a market. It has entered the buy zone and shows the possibility of a downside correction. When the Three Black Crows pattern appears in this situation. That is a strong confirmation that the price trend is about to reverse. In this situation, you can open a SELL order as instructed previously.
For example: On the daily frame chart of the GBP/USD pair, the Three Black Crows pattern. It has formed in a strong resistance zone. You will see it happen at the second top of a 2 top 3 bottom pattern. At the same time, the RSI indicator also shows that the market is in the overbought zone. All of these signals together signal that the trend is about to reverse from bullish to bearish.
Reversal candlestick pattern method with SMA 30
Three Black Crows combined with the price moving from above and crossing the SMA 30 line. This is a clear sign of a trend reversal. This combination creates a stronger signal, giving traders more confidence when opening a SELL order and looking for profits.
For example: In the chart of the AUD/USD pair below, the 3 black crow candlesticks appear simultaneously with the third candle crossing the SMA 30 line. This is a strong signal that the trend is about to reverse.
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A recognizable example of the 3 black crow candle pattern
In the H1 timeframe of the AUDUSD chart. A clear example of the 3 black crows pattern has appeared. After a period of strong gains, AUD/USD encountered continuous selling pressure for three consecutive trading sessions. It forms a Japanese candlestick pattern of 3 black crows with long realistic candle bodies. However, as observed on the chart, the pattern ended right at the support level (line A). The bulls tried unsuccessfully to retest the previous high and broke the AUD/USD uptrend, leading to a bearish period.
Meanwhile, on the H1 chart of USD/JPY, the 3 black crows pattern has formed. The first two candles are of similar length, but the third candle has a smaller body, showing that the pattern’s signal is not very strong and the price then continues to increase.
summary
Forex Trading hopes that through the above article, traders have an overview of the 3 black crows candle pattern and how to take advantage of this pattern most effectively. Don’t forget to visit our website to update more useful information and new trading opportunities!
FAQs
When does the inverted hammer candlestick appear?
The inverted hammer candlestick often appears at the end of a downtrend, when the price has dropped sharply and shows signs of a bullish reversal.
Distinguish the inverted hammer candlestick from other candlestick patterns.
Common point:
- Inverted hammer candles have short candle bodies, usually green (bullish) or red (bearish).
- The lower shadow is long, at least twice as long as the candle’s body
- The upper shadow is short or absent
How to trade with inverted hammer candles?
How to trade:
- Enter a buy order when the price surpasses the high of the inverted hammer candlestick
- Take profit at the nearest resistance level when making a trade
- Stop loss below the low of the inverted hammer candlestick
