Three Identical Crows

This candlestick pattern is a bearish reversal pattern that contains the same criteria as the three black crows pattern. The only difference between these two patterns is that the three identical crows pattern’s opens are at the previous day’s close. This is contrary to the three black crows pattern where instead the open occurs within the body of the previous candle. What this signifies is that there is more anxious selling than with the three black crows pattern. This pattern is more severe and therefore has a higher reliability as a bearish reversal pattern.

Let’s review the criteria necessary for this candlestick pattern to occur. First, this pattern must be formed after a significant uptrend. Second, there should be three long black (or red) candlesticks with each candle either close to or equal in length. The third requirement is that each day must close near its low. Lastly, as described previously, the opening price of the three candlesticks must open at the previous day’s close (or very close to) as illustrated in the image above.

The reliability of the three identical crows candlestick pattern is enhanced with the length of the candlesticks. Reliability is also increased with the shortening of the lower shadow of the candles and additionally with an increase in trading volume.

What does the three identical crows pattern indicate is happening in the markets?
This signal indicates overbought conditions coupled with panic selling and a loss of buying power. The uptrend has reached new levels and more sellers start to show up than the bulls would prefer. The selling is severe and there is a lack of buyers that show up at the next day’s open. This pattern shows that the bears are in control as the stock continues to drop to a new closing low on the second and third days. The drive to get out of this trade is severely increased.

Japanese Candlesticks are the fastest way for new investors to quickly and accurately read stock charts. Once you are comfortable with the major candlestick signals, expand your expertise by learning the various secondary Candlestick Patterns. Combine these with your favorite Technical Analysis indicators, such as the moving average, and you have the perfect trading arsenal for evaluating stocks, currencies, commodities, or Exchange Traded Funds.

Please continue your candlestick pattern education and read about the two crows pattern.