Three Black Crows Candle Pattern Explained (real chart examples)

Three Black Crows Candle Pattern Explained (real chart examples)
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The Three Black Crows Pattern is a candlestick chart pattern which signals a potential reversal in the market. In this article we will show you how to identify it in the right market position with real chart examples.

The Three Black Crows Candle Pattern is a three candle pattern which signals a potential reversal or consolidation in the market. The Pattern can be Bearish.

Three Black Crows Candle Pattern should be identified as a signal when occurring in an up-trending market or at the top of a range.

Three Black Crows Candle Pattern Criteria:

  • Three declining consecutive red (bearish) candlesticks.
  • The candles should close at , or near, their lows (small or no lower shadow).
  • Each candle should open within the prior session’s real body.

Additional Notes:

  • It is a better signal if the prior session to this pattern is a green (bullish) candle and the real body of the first candle of the Crow Pattern is below the previous session’s high.
  • If the Three Crows Pattern forms with the second and third candle opening near the close of the previous candle it is referred to as Identical Three Crows. This is regarded as especially bearish, but it is a very rare pattern.
  • The danger with the Identical Three Crows Pattern is that the bears may become overextended and instead of a continued sell off, a trader can get trapped in a bullish reversal (Bull Trap).

Quick Reference Guide – Candlestick Basics. If you need a reminder of what candlesticks are have a look at our free PDF – Candlesticks Explained.

The criteria and examples above are just the technical definitions of this pattern. However patterns are only useful with context and with real chart examples.

No pattern will ever exactly match the criteria and in order to be a useful signal must occur in the correct place in a trend. Let’s start by looking at the the classification table for this pattern.

Three Black Crows Candle Pattern Classification Table

Number of Candles In Pattern 3
Type: (Reversal/Continuation) Reversal
Bullish/Bearish/Indecision Bearish
Market Conditions: Range, Down-trend, Up-trend Up-trend, Ranging
Position: Top, Bottom, Range Top

What Price Action Does The Three Black Crows Candle Pattern Represent?

All candlestick patterns are formed by price action. But the popular ones represent price action that may have significance in signalling the direction of the market.

The Three Black Crows are formed by bearish price action. It is formed by consecutive red (bearish) candles that ideally push to lower lows with each candle closing near low creating a small lower shadow.
This pattern, when seen in an up-trend could suggest that the bears have taken control and the uptrend may have lost steam leading to a potential reversal.

Like many candle patterns it is often better as a warning signal to review your current position rather than as a signal to enter the market.

In fact, the price action represented by this pattern is quite likely to be followed by a counter reversal move to maintain the trend or retest resistance.

The signal is best used with confirmation or may give more confidence if it forms at an area of resistance.

Hint: It is always good practice to look for confirmation for any signal that you are looking to trade.

Three Black Crows Candle Pattern Example With Confirmation

In the example below of the US500, the market was up-trending and hit a recent high followed by a retracement.

On the second attempt to break the high the Three Black Crows Pattern formed and the price action also formed a double top.

The market then continued to reverse from the top and also broke below the previous retracement establishing a down-trend.

Three Black Crows Candle Pattern Example With Confirmation

In What Market Conditions Does The Three Black Crows Candle Pattern Become A Signal?

To recap, the Three Black Crows Candle Pattern, can be seen as a potential signal when forming at the top of an up-trend or the top of the range.

It is preferable to see a sustained up-trend with a final relatively large green (bullish) candle before the first candle of the Three Crows Pattern.

It is a weak signal in itself and is best used with confirmation or if formed at resistance. Let’s look at a couple of real chart examples.

Three Black Crows Candle Pattern In A Ranging Market

A ranging market is one where the price action moves up and down between two sets of support and resistance. This is also known as a sideways, balancing or horizontal market. In essence the price action is struggling to break out of the range decisively either on the upside or downside.

Ranging Market Example
Ranging Market Example

As you can see in this example of the US30 the market the Three Black Crows Candle Pattern formed when the market tested the previous high.

The pattern helped to confirm the top of the range and rejection of the move. The market then moved back to the bottom of the range.

Three Black Crows Candle Pattern Example in a Ranging Market
Three Black Crows Candle Pattern Example in a Ranging Market

Three Black Crows Candle Pattern In An Up-Trending Market

An up-trending market is one where the price action generally moves down over time and is characterized by higher lows and higher highs.

Up-trending Market Example
Up-trending Market Example

In this US500 market example the market was up-trending and then had a short period of consolidation before a strong bullish move up.

The Three Black Crows Pattern then formed at the top of the move. The market then retraced and settled back. The pattern did not result in a change of trend but did indicate a potential rejection of the momentum of the trend.

This is a signal for the trader to review their trade and the market structure to see if they are still happy with their position.

Three Black Crows Candle Pattern Example in an Up-trending Market
Three Black Crows Candle Pattern Example in an Up-trending Market

Candle Pattern MT4 Indicator Downloads

If you trade using MT4 then why not try out our free MT4 indicators? Most of our indicators, including the most common candle pattern indicators are Free and available for download here: MT4 Indicator Page.

Most of our candle indicators also have an alternate version which can show the signal in a separate indicator window of the chart if that is your preference.

For advanced users you can use our Pin Bar Pattern Manager (Paid) to specify your own parameters of candles you want to identify. You can find that here.

Important Information About Candlestick Patterns

Attribution:

All of the candlestick patterns that we explain on NothardTrading.com must be attributed to Steve Nison and his books on candle charting, the most famous of which was Japanese Candlestick Charting Techniques (Amazon). You can also find out more at his website here.

Interpretation Of Candle Patterns:

It is important to note that these patterns were originally identified on the daily timeframes of index charts, which is still where they are the most useful. However, this does not mean that they cannot be used for other markets or time frames.

No signal is perfect and should never be used as such. Any patterns that you identify only signals a potential move based on the fact that history repeats itself and forms regular patterns in similar situations.

But past performance is no guarantee of future results! So always treat these patterns with care and think of these guidelines when using them.

Best practice guide for trading of candle patterns:

  • No pattern is ever perfect. Be aware that patterns will form slightly differently each time and in different markets.
  • Use them as consistently as possible. Even though you will never find patterns exactly the same, you should always implement a consistent ruleset when identifying and using patterns.
  • It is never a guarantee, only an indication.
  • Make sure you are using it in the right context. For example if it is a continuation pattern then don’t use it to trade reversals!
  • Use multiple signals (confirmations) to have more confidence in your trading.

Related Candle Patterns

The opposite of this pattern is the Three Advancing White Soldiers Candle Pattern which is a bullish reversal pattern when forming at the bottom of a trend or a range. You can read our article about it here: Three Advancing White Soldiers.

Justina Nothard

Justina Nothard

Hi, I’m Justina Nothard, a retail investor trading Stock Index Futures.

I understand how hard it can be for the ordinary trader to learn the basics and find useful tools and practical information.

This is why I decided to create Nothard Trading to help you take control of your trading.

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