Two Crows

Two Crows Pattern

The two crows pattern is a very reliable secondary candlestick pattern that indicates that the high has been reached after an uptrend and there is a possibility for a reversal. This pattern is a top-reversal 3-day gap pattern that signifies the departure of a bullish market. The gap is created on the third day as it opens in the body of the previous day’s small black candle. This gap is removed very quickly on the third day since the bears were able to fill the gap and close the price within the white candle body.

There are three criteria required for this bearish pattern to occur. First, there is a long white candle continuing the uptrend. Second, the real body of the following day is black while gapping up, but not filling the gap. Finally, the third day opens within the second day’s body and it closes within the white candle’s body. A black candle is then produced that filled the gap.

What does this pattern indicate is occurring in the markets?When this pattern first appears the mood of the markets has been bullish. The bears then step in and the price closes lower than the opening for the day. The price gap is still not filled however and the bulls find comfort in this. The following day the price opens a little bit higher as the bulls try to regain control but they are unable to keep the momentum going. Buying pressure drops and the bears push the price lower, taking over and closing the gap. When the two crows pattern appears on a chart the bulls should consider it a sign that change is coming and so are the bears.

When looking for the two crows pattern it is important to note that if the third day were to close more than halfway down the white candle, it would then form an Evening Star Candlestick. This pattern is also a top reversal signal that is difficult to identify as compared to other patterns. It also indicates a tug-of-war between the bulls and bears, with the bears eventually taking over.

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 meeting lines candlestick pattern.