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To see the performance of the pattern in your stock exchange in the context of other stock markets please examine the table below. Find your stock market there and see how it ranks among the others. This will give you an idea about the pattern’s strength and reliability and help you in your selling decisions.
BEARISH THREE BLACK CROWS
Definition
This pattern indicates a strong reversal in the market. It is characterized by three normal or long candlesticks decrementing downwards. The opening of each day is slightly higher than previous close and prices progressively close at lower levels. This staircase like behavior signals the reversal of the trend.
Recognition Criteria
1. The market is characterized by a prevailing uptrend.
2. Three consecutive normal or long black candlesticks are observed.
3. Each candlestick opens within the body of the previous day.
4. Candlesticks progressively close at new lows, below the preceding day.
Pattern Requirements and Flexibility
The Three Black Crows consists of three consecutive normal or long black candlesticks. The last two candlesticks must open within the range of the preceding candlestick and close lower.
Trader’s Behavior
The pattern appears in a context where the market has stayed at a high price for too long. The market is still going up and it is now approaching a top or has already reached the top. Then we see a decisive downward attempt represented by the first black candlestick. Erosion of prices continues in the next two days characterized by lower closes. Bulls are now forced to take profits.
Sell/Stop Loss Levels
The confirmation level is defined as the last close. Prices should cross below this level for confirmation.
The stop loss level is defined as the last high. Following the bearish signal, if prices go up instead of going down, and close or make two consecutive daily highs above the stop loss level, while no bullish pattern is detected, then the stop loss is triggered.