Three Black Crows Candlestick Chart Pattern 
The
Three Black Crows is a bearish candlestick chart pattern commonly used in
forex trading and other financial markets to signal a potential
trend reversal from bullish to bearish.
What is the Three Black Crows Pattern? The
Three Black Crows pattern consists of
three consecutive long-bodied bearish (red or black) candlesticks, each closing lower than the previous one. It typically appears
after an uptrend and signals that the buying pressure is weakening while sellers are taking control.
Pattern Characteristics: Three Consecutive Bearish Candlestick All three candles close progressively lower. Each opens within or near the previous candle's body.
No (or Small) Lower Wicks This suggests strong selling pressure.
Occurs After an Uptrend The pattern is only significant when it appears after a noticeable bullish move.
What It Means for Traders: Trend Reversal Signal: Indicates a possible shift from an uptrend to a downtrend.
Bearish Sentiment: Sellers are in control.
Confirmation Needed: Consider volume and other indicators (like RSI or MACD) to confirm the signal and avoid false reversals.
Example in Forex: Imagine the EUR/USD pair is in an uptrend. Suddenly, three long bearish candles appear one after the other. This could be a signal that the uptrend is ending, and a downtrend may begin — a potential sell opportunity. A
break below a key support level.
Volume confirmation (higher volume on bearish candles). Bearish confirmation from indicators like
RSI,
MACD, or
Moving Averages.
Entry Point Consider entering a
short/sell position after confirmation on the next candle. A more conservative trader might wait for a pullback to a resistance level (former support).
Stop Loss Placement Place a stop-loss
above the high of the first candle in the pattern. Or use the
most recent swing high.
Take Profit Target Use support zones,
Fibonacci retracement levels, or
risk-reward ratio (e.g., 1:2 or 1:3). Trailing stop-loss can also lock in profits during a strong downtrend.
