Definition: Get the highest rated stock from Americanbulls for this pattern >>>
During an uptrend we see the market closing lower after
an opening gap. Then we see a black day that fills the
gap creating the Bearish Two Crows Pattern. It suggests
the erosion of the uptrend, and warns about a possible
trend reversal.
Recognition Criteria:
1. Market is characterized by uptrend.
2. We see a long white candlestick in the first day.
3. Then we see a black candlestick on the second day
characterized by a gap up.
4. Finally we see a black candlestick whose opening
price is inside the body of the second day and which
closes inside the body of the first day.
Explanation:
In the Two Crows bear pattern, the market is already
in an extended uptrend. We see a gap in the opening
of the second day. This higher opening is followed by
a lower close in this second day warning that there
is some weakness in the rally. The third day also opens
at a higher price, but not above the open of the previous
day, and then prices go down with a close well within
the body of the first day. This third day action fills
the gap of the second day. It shows that the bullishness
started to erode quickly.
Important Factors:
A confirmation on the fourth day is required to show
that the uptrend has reversed. This confirmation may
be in the form of a black candlestick, a large gap down
or a lower close on the fourth day.
