Three Black Crows Candlestick Pattern: All You Need To Know

The Three Black Crows candlestick pattern is a bearish reversal pattern that is used to signal that the current uptrend is coming to an end. This pattern consists of three consecutive black candlesticks with each candle having a lower close than the previous one. The Three Black Crows pattern is believed to be one of the most accurate reversal patterns and traders often use it to enter short positions.

How to Trade the Three Black Crows Pattern

three black crows candlestick pattern strategy

The Three Black Crows pattern is a bearish reversal pattern that is used to signal that the current uptrend is coming to an end. This pattern consists of three consecutive black candlesticks with each candle having a lower close than the previous one. The Three Black Crows pattern is believed to be one of the most accurate reversal patterns and traders often use it to enter short positions.

The best way to trade the Three Black Crows pattern is to wait for confirmation from another technical indicator or support/resistance levels before entering a short position. One such indicator that can be used for confirmation is the Relative Strength Index (RSI). The RSI should be in overbought territory (above 70) when the Three Black Crows pattern forms. Other confirmation indicators include moving averages, stochastics, and MACD.

Once you have confirmation from another technical indicator, you can enter a short position at the open of the fourth candlestick. The stop loss should be placed above the high of the Three Black Crows pattern and the initial target can be set at two times the risk-reward ratio. For example, if you risk 20 pips on your trade, your initial target should be 40 pips.

Conclusion:

The Three Black Crows candlestick pattern is a bearish reversal pattern that can signal the end of an uptrend. This pattern consists of three consecutive black candlesticks with each candle having a lower close than the previous one. The Three Black Crows pattern is believed to be one of the most accurate reversal patterns and traders often use it to enter short positions.

To trade this pattern effectively, it’s important to wait for confirmation from another technical indicator before entering a short position. Once you have confirmation, you can then enter a short position at the open of the fourth candlestick with a stop loss placed above the high of the Three Black Crows pattern. The initial target can be set at two times the risk-reward ratio.

 

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