Definition - Consisting of three candlesticks, this pattern sees two black candlesticks on the last two days that represent the two crows that perch on day one’s white candlestick.
- On the first day, a strong white candlestick appears in a market experiencing a prevailing uptrend.
- On the second day, another black candlestick is observed that gaps up.
- On the final day, a third black candlestick forms in the trading range of the second day before closing inside the trading range of day one.
Patterns and Flexibility
Starting with a strong white body, the Bearish Two Crows then sees a black body that shows an upside gap with the first day. On day three, another black body shows that opens higher than the previous close and closes inside the first day’s body.
Behaviour of Trader
During an uptrend, the appearance of a white candlestick seems normal and adds to the strength of the market. After opening higher and gapping up, a black candlestick forms after prices fall. However, the bulls are not too concerned with this as prices still stay above the previous close. Even though the third day opens higher than the previous close, prices soon tumble and close inside the body of day one. Thanks to this third day, the gap is filled and the bulls’ position is weakening.
Sell/Stop Loss Levels
For there to be confirmation, the prices must cross below the last close. For the stop loss level, the last high is normally used. If the prices rise following the bearish signal, the stop loss will be triggered if there are two consecutive highs above the stop loss level and if there is no bullish pattern to be seen.