It is one of the strong reversal signals for market top fishing transactions. Although the Three Black Crows candlestick pattern rarely appears, it offers an almost absolute price reversal rate in Forex. Today’s posts of How to trade will introduce you to this special candlestick pattern and how to use it in Forex trading in an optimal way.
What is a Three Black Crows candlestick pattern?
Three Black Crows (TBC) candlestick pattern is a warning signal about the upcoming downtrend in Forex. It usually appears after an uptrend and consists of three red bearish candles in a row.
Characteristics of the pattern
The pattern consists of 3 candlesticks.
+ First candlestick: is a red bearish candle.
+ Second candlestick: is also a red bearish candlestick. It has an opening price laid within the first candlestick, with a short or without a shadow.
+ Third candlestick: is a red candle again. It has an opening price laid within the second candlestick. Its closing price is close to the lowest price of the 2nd candlestick.
The price always creates the Three Black Crows pattern at peaks in Forex. It alerts traders that a downtrend is about to take place.
Or sometimes the market is moving sideways. Suddenly, the pattern appears, indicating that the price will collapse, forming a downtrend.
Variant candlestick patterns
In addition to the standard TBC pattern, there are also variants with different shapes on the price chart in Forex. In terms of meaning, they all bring bearish signals to investors.
How to trade Forex effectively with the Three Black Crows pattern
Here, I will show you how to place a basic Forex order using the Three Black Crows candlestick pattern. Please note that this is a bullish to bearish reversal pattern. Therefore, you can only open SELL orders with this candlestick pattern. Open a SELL order as follows:
+ Entry Point: As soon as the price completes the pattern.
+ Stop-Loss: At the highest price level before the price turns down and creates the pattern.
+ Take-Profit: When the price touches old support levels that have been formed in the past.