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. Today’s post of How to trade will introduce you to 3 black crows candlestick pattern and how to use it in options trading effectively.
Video on how to identify and use Three Black Crows candlestick pattern
What is Three Black Crows candlestick pattern?
Three Black Crows pattern is a Japanese candle pattern. This is a warning signal about the upcoming downtrend. It usually appears after an uptrend and consists of three red bearish candles in a row.
Characteristics of Three Black Crows
Three Black Crows consists of 3 candlesticks.
- First candlestick: is a red bearish candle.
- Second candlestick: is also a red 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 candlestick.
Types of Three Black Crows candlestick patterns
In addition to the standard pattern, there are also variants with different shapes on the price chart. In terms of meaning, they all bring bearish signals to investors.
Meaning of 3 Black Crows pattern
The price always creates the Three Black Crows pattern at peaks. It alerts traders that a downtrend is about to take place.
Or sometimes the market is moving sideways. Suddenly, this candlestick pattern appears, indicating that the price will collapse and form a downtrend.
Options trading with this candlestick pattern
It is just like other reversal candlestick patterns from bullish to bearish. The Three Black Crows candlestick pattern is also used to open DOWN orders and do top fishing with high accuracy. A common application of this price signal is to combine it with other indicators to increase trading accuracy.
Combined with Support
Requirements: A 5-minute Japanese candlestick chart. Identify the Support zones of the market. Open orders with an expiration time of 15 minutes or above.
How to open an order:
+ Open a DOWN order when the price falls out of the Support zone with Three Black Crows patterns. This is a Breakout signal which has very high accuracy.
Another example is when the price breaks out of the Support with this pattern.
After this breakout, there will be a sharp decline in prices.
Perfect your trading skills with this candlestick pattern by testing it on a Demo account. This is a very effective and safe way to trade.