There is a candlestick pattern with the name of the Three Black Crows. It develops at the top of the uptrend when the trend is going to reverse. And it consists of three subsequent bearish candles. The Three Black Crows is a bearish reversal pattern.
In this guide, I will shortly present this pattern to you. I will also show you how to use it in trading on the Olymp Trade platform.
Key Takeaways🔑
| →The Three Black Crows is a bearish reversal pattern that usually indicates a strong downtrend is imminent. |
| →This pattern is commonly identified during periods of high market volatility. |
| →Understanding and accurately identifying this pattern can be valuable for predicting potential market downturns. |
Contents
How to identify the Three Black Crows pattern
I have already mentioned, that this pattern can be observed at the peak of the uptrend when the trend reversal takes place. The three bearish candles are developing one after another in the way, that the open of the next candle is only slightly higher than the close of the earlier one. From that, you can assume, a strong downtrend has just begun.
The pattern called the Three Black Crows unfolds on the markets with high volatility. Like after some news release a strong trend is rising only to collapse suddenly.
Pros and Cons of the Three Black Crows Pattern 😊🙁
Pros:
- 🔵 Reliable Indicator: The Three Black Crows pattern is considered a reliable indicator of a strong bearish reversal.
- 🔵 Predictive Tool: It can be a valuable tool for predicting potential market downturns when identified correctly.
- 🔵 Universally Recognized: This pattern is recognized and used by traders worldwide, providing a common language for traders.
Cons:
- 🔴 False Signals: Like many trading patterns, the Three Black Crows can sometimes generate false signals.
- 🔴 Requires Confirmation: It’s often recommended to seek confirmation from other indicators or patterns before making a trade based on this pattern.
- 🔴 Not for Novice Traders: This pattern can be complex to identify and interpret correctly, which might be difficult for novice traders.
Comparison between Three Black Crows and Other Bearish Patterns 📊
| Pattern | Key Differences |
|---|---|
| Three Black Crows | Indicates a strong bearish reversal after a significant uptrend. It’s formed by three consecutive bearish candles. |
| Bearish Engulfing | Consists of two candles. The second candle (bearish) completely engulfs the first one (bullish), indicating a potential bearish reversal. |
| Shooting Star | A single-candle pattern appearing in an uptrend, with a small real body near the low of the day and a long upper shadow, suggesting a potential bearish reversal. |
How to use the Three Black Crows candles pattern in trading on the Olymp Trade platform
So you already know this particular pattern is formed when the uptrend is exhausted. The Three Black Crows in the body of three bearish candles, promise the beginning of a strong downtrend. That is why this is a good time to go short. Place the order immediately after the last crow fully develop. If you trade, like in the example, 1-minute interval candles, your position should last from 5 to 10 minutes.
Go to your Olymp Trade demo account and find the Three Black Crows on the chart. Practice trading with it and tell us your findings.
All the best!
Frequently Asked Questions 🙋♀️
1. How reliable is the Three Black Crows pattern?
– It’s generally considered a reliable indicator of a strong bearish reversal, but like all trading patterns, it can sometimes produce false signals.
2. Can the Three Black Crows pattern be used in isolation for trading decisions?
– While it’s a strong indicator, it’s often best to use it in conjunction with other indicators or patterns for confirmation before making a trading decision.
3. How common is the Three Black Crows pattern?
– The occurrence of this pattern depends on market conditions, particularly high volatility periods. It’s not uncommon, but it isn’t one of the most frequently occurring patterns either.
4. Is the Three Black Crows pattern suitable for beginners?
– It can be complex to identify and interpret correctly, making it more suitable for experienced traders. Beginners should practice identifying this pattern in a risk-free environment, like a demo account, before using it in live trading.
5. Can this pattern be used for all types of assets?
– Yes, the Three Black Crows pattern can be used for various types of assets that can be charted over time, including stocks, indices, commodities, forex, and cryptocurrencies.