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The 3 Black Crows Candlestick Pattern is a bearish reversal pattern. This forms at the peak of an uptrend. It forms as a series of three long consecutive bearish candles.
Japanese candles are objectively the oldest form of price chart analysis. This theory has been developing for centuries. The birth of candlestick analysis is taken to be the 18th century and the father of the method was Munehisa Homma, who was a trader in the rice market. At that time, investing was compared to war, and as we all know, every war needs a good strategy, reconnaissance, proper positioning of troops, and so on.
A candlestick chart allows you to identify patterns that have already occurred in the past. The existence of a candlestick pattern requires the existence of a trend. A candlestick pattern may be a bullish or bearish reversal pattern but there are also patterns which herald the continuation of an existing trend. The 3 black crows candlestick pattern is a bearish reversal pattern.
Key Takeaways🔑
| →The 3 Black Crows Candlestick Pattern is a bearish reversal pattern that forms at the peak of an uptrend. |
| →It consists of three long consecutive bearish candles, signaling a strong downtrend. |
| →Trading the pattern effectively requires proper identification and confirmation using additional indicators. |
Identifying the 3 Black Crows Candlestick Pattern
Look at the diagram below. It illustrates the idea of the 3 black crows candlestick pattern. More or less in this form, you will encounter it on charts of different assets on different time frames.
The Three Black Crows candle pattern is formed by three consecutive bear candles that develop at the end of a downtrend. The open of one candle is almost at the same level or slightly higher than the close of the previous candle. This signals the development of a strong downtrend.
The Three Black Crows pattern usually develops when the markets experience high volatility. For example, after a news item is released resulting in a strong uptrend, the Three Black Crows will usually form when the trend suddenly reverses driving prices down again.
What do three black crows mean?
The three black crows candlestick is a strictly defined pattern. Not every three falling candles in a row have to be this pattern. For the performance of this pattern to be excellent, it must be preceded by an upward price movement. Reflecting on the psychological aspect of this pattern, it is clear that its strength is in clearly showing the strength of the sellers over the course of 3 candles in a row. A bottom break-out of the pattern mostly indicates a change of trend to a downtrend.
How do you trade 3 black crows on IQ Option?
Once an uptrend becomes exhausted, the Three Black Crows pattern starts to develop. This signals a strong downtrend is developing. You should enter a long sell position. If you're using 1 minute candles, your entry point should be anywhere within the 3 bearish candles. If you can enter your sell position in the first candle, the better. Your trade should last anywhere between 5 and 10 minutes.
Three black crows and three white soldiers
Like many candlestick patterns, this one also has its inverse twin. In a downtrend, the pattern three white soldiers can be found. It is a bullish reversal pattern. It works in the same way as the setup discussed today and is based on similar motives of market participants.
Pros and Cons of the 3 Black Crows Candlestick Pattern 👍👎
- Pros:
- Reliable bearish reversal pattern when properly identified.
- Can help traders capitalize on a strong downtrend.
- Applicable to various time frames and assets.
- Cons:
- Can be misinterpreted if not confirmed with other indicators.
- Requires patience and practice to master.
- Not a standalone indicator – best used in combination with other analysis tools.
| 3 Black Crows Characteristics | Trading Tips |
|---|---|
| Bearish reversal pattern | Confirm with other indicators to avoid false signals |
| Forms at the peak of an uptrend | Use trendlines or moving averages to identify the uptrend |
| Three consecutive long bearish candles | Ensure the candles have significant body length and minimal wicks |
3 Black Crows Candlestick and your homework
Now that you've learn how to trade the three black crows candlestick pattern, try it out in your IQ Option practice account. As training, we have a homework assignment for you. Try to look for occurrences of the 3 black crows candlestick formation on EURUSD charts over the last year. Examine the 5-minute, 15-minute, 1-hour and 4-hour time frames in this way.
Consider how often this pattern occurs and how effective it is at different intervals. You will certainly be able to use the conclusions of this study in your daily trading. Share your results in the comments section below.
Good luck!
Frequently Asked Questions About the 3 Black Crows Candlestick Pattern
- Q: How do I confirm the validity of the 3 Black Crows Pattern?
- A: Utilize additional technical indicators, such as trendlines, moving averages, or RSI, to confirm the pattern's validity and increase the probability of a successful trade.
- Q: Can the 3 Black Crows Pattern be used for all time frames and assets?
- A: Yes, the pattern can be applied to various time frames and assets, making it a versatile trading tool.
- Q: What is the inverse of the 3 Black Crows Pattern?
- A: The Three White Soldiers Pattern is the bullish counterpart of the 3 Black Crows Pattern, signaling a trend reversal from downtrend to uptrend.
- Q: How do I use the 3 Black Crows Pattern for trade entry and exit?
- A: Once you've identified the pattern and confirmed it with other indicators, enter a short sell position. The trade duration will depend on the time frame you are using. Set a stop loss above the pattern and a take profit target based on your risk/reward ratio.
- Q: Is the 3 Black Crows Pattern a standalone indicator?
- A: No, it is best used in combination with other technical analysis tools to increase the probability of successful trades.