Three Black Crows and Three Identical Crows: Explain with Example

THREE BLACK CROWS AND THREE IDENTICAL CROWS

THREE BLACK CROWS

Three Black Crows Description

As illustrated in Figure 2.51, the Three Black Crows got their name from the resemblance of three crows looking down from their perch in a tree. This signal, occurring after a strong uptrend, indicates the crows looking down or lower prices are to come. Each of these candles should close very near the low for the day. This pattern, as will be seen, is the opposite of the Three White Soldiers.

Criteria

• Three long black bodies occur, all of close to equal length.
• The prior trend should have been up.
• Each day opens within the body of the previous day.
• Each day closes near its low.

Pattern Psychology

After an uptrend a long black candle forms. The uptrend has now reached levels where the sellers have started to step in. The first long black candle body is followed by two more long black bodies. Each having opened in the previous days body indicates that buying was occurring early each day but the bears kept forcing prices down by the end of the day. This more consistent process of selling provides a stronger downtrend potential versus a rapid overselling period. (See Figure 2.52.)

THREE IDENTICAL CROWS

Description

The Three Identical Crows in Figure 2.53 have the same criteria as the Three Black Crows. The difference is that the opens are at the previous day's close.

Criteria

• Three long black bodies occur, all of close to equal lengths.
• The prior trend should have been up.
• Each day opens at the close of the previous day.
• Each day closes near its low.

Pattern Psychology

After an uptrend a long black candle forms. However, the selling is more severe. There do not appear to be any buyers at the next day's open. The long black candles, having a stair-stepping pattern to them, indicates a much greater motivation to get out of the position. (See Figure 2.54.)