What Is The Three Black Crows Candlestick Pattern & How To Trade With It

Three Black Crows Candlestick Pattern

The Three Crows is a bearish candlestick pattern that reveals the potential reversal of an uptrend. The pattern consists of three consecutive long-bodied candles.

What is the Three Black Crows Candlestick Pattern?

The Three Black Crows indicate that each candle closes lower than the preceding candle, describing that the bulls lose the combat, and the bears are now in charge.

The first of the pattern’s three candles is a reversal candle, signaling the occurrence of a downtrend.

The second candle is bigger than the first candle and closes near its low.

The last candle is equal or bigger than the second candle. It has no or a little lower wick.

Here’s what the Three Black Crows Candlestick Pattern looks like on a chart:

Three Black Crows Candlestick Pattern on a chart
Three Black Crows Candlestick Pattern on a chart

The Three Black Crows can open with a gap, but the second and third candles open within the body of the previous candles. Additionally, when there is no or a small lower wick, this confirms the bears’ winning.

The pattern surfaces at the end of the bullish trend. It can also appear after the consolidation period.

The counterpart of the Three Black Crows is the Three White Soldiers Candlestick Pattern. It emerges in a downtrend and signals a possible trend reversal from the bearish to bullish.

Three Black Crows and Three White Soldiers Candlestick Pattern
Three Black Crows and Three White Soldiers Candlestick Pattern

It must be kept in mind that the Three Black crows show up rarely on the charts. You can spot these candlestick patterns on long and short term timeframes. They can appear on forex currency pairs, stocks, indices, cryptocurrencies, commodities, metals, energies, gold, silver and more.

How to use the Three Black Crows Candlestick Pattern?

The pattern can give signals for going long or short. For example, traders can go long before the appearance of the Three Black Crows, and short after its formation.

However, to trade the pattern, one should look for its development. If any of the candles have a stretchy wick, this is just a momentarily shift and not a trend reversal.

Besides this, if the third candle is smaller than the others, this is not a reliable Three Black Crows Candlestick Pattern.

There exists a time when the pattern becomes more aggressive. When the candles are unusually large, this signifies that the bears have over-dominated and push the price into the oversold area.

Traders can verify the oversold condition by applying technical indicators like the RSI or Moving Averages. Also, traders use these indicators to confirm a breakdown rather than using the Three Black Crows individually.

One of the popular ways to trade the Three Black Crows is to look for the volume which can be done with the volumes indicator. If the volume is low before the establishment of the pattern, and the Three Black Crows appear with the high volume, it suggests a strong trend reversal.

Three Black Crows Candlestick Pattern trading strategy

Steve Nison, in the book Japanese Candlestick Charting Techniques, mentioned that the Three Black Crows is useful for long-term traders.

It may not be wise to rely solely on the pattern; instead, it should be used in conjunction with other technical indicators for more complete trading strategies.

Three Black Crows Candlestick Pattern buy strategy

  • Locate the pattern in an uptrend.
  • Wait for the price bar to go bullish before entering.
  • Place a stop-loss near the recent low before the Three Black Crows.
  • Exit the trade when the pattern appears.

Three Black Crows Candlestick Pattern sell strategy

  • Navigate the pattern in an uptrend.
  • Wait for the price bar to go bearish before entering.
  • Place a stop-loss near the recent high form the Three Black Crows.
  • Exit the trade when the price level rises.

Three Black Crows Candlestick Pattern conclusion

The Three Black Crows Candlestick Pattern can be used on your trading platform charts to help filter potential trading signals as part of an overall trading strategy. Three Black Crows Candlestick Pattern can show market movements such as a trend reversal.

I would prefer to use the majority of candlestick patterns such as the Three Black Crows Candlestick Pattern on the 1-hour charts and above. I tend to find that these charts contain less market noise than the lower time frames and thus give more reliable signals for my forex trading strategies. This also means that I spend less time staring at charts and can also set alert notifications to let me know when price has reached certain levels, candlestick pattern has been formed or a particular indicator value has been reached.

The Three Black Crows Candlestick Pattern is just one method of technical analysis amongst thousands. I would not build a trading system alone, but rather combine with other technical indicators such as moving averages, Parabolic SAR, Stochastic Oscillator, RSI, ADX and price action analysis.

Of course, every trading system will generate false signals which is why money management is so important. I would personally be implementing sensible money management and only take traders that give me a favorable risk to reward ratio, ideally of at least 1:3. This means that one losing trade does not wipe out consecutive winners.

The methods of implementing the Three Black Crows Candlestick Pattern into a trading strategy that are outlined within this article are just ideas. I would always ensure that I have good money management, trading discipline and a trading plan when using any forex strategy.

Furthermore, I would combine multiple technical analysis, fundamental analysis, price action analysis and sentiment analysis to filter all entries. You should trade forex in a way that suits your own individual style, needs and goals.

If you would like to practice trading with the Three Black Crows Candlestick Pattern, you can open an account with a forex broker and download a trading platform. If you are looking for a forex broker, you may wish to view my best forex brokers for some inspiration.

Happy trading!