BEARISH TWO CROWS
Definition
This pattern is a made up of three candlesticks. The black candlesticks of the second and third day represent the two crows that perched on the first white candlestick.
Recognition Criteria
1. The market is currently characterized by a strong upward trend.
2. A strong white candlestick appears on the first day.
3. The second day is a black candlestick that gaps up.
4. On the last day another black candlestick appears that opens inside the body of the second day and then closes inside the body of the first day.
Pattern Requirements and Flexibility
The Bearish Two Crows pattern begins with a strong white candlestick. This is followed by a black candlestick that forms an upward body gap with the first candlestick. On the third day, another black candlestick appears, opening at or above the second day's close. The third day's candlestick should close within the body of the first candlestick.
Trader’s Behavior
An uptrend has been established, and the strong white candlestick reinforces the existing bullish sentiment. The following day opens higher with a gap up. Prices dip slightly, forming a short black candlestick. The bulls remain unfazed, as the black body does not close below the previous day’s close. On the third day, the market opens at or above the second day’s close but declines throughout the day, closing well within the body of the first day’s candlestick. This action on the third day fills the gap created on the second day, indicating that the bullish momentum is weakening.
Sell/Stop-Loss Levels
The confirmation level is determined by the last close. For confirmation, prices should fall below this level.
The stop-loss level is defined as the last high. If, following the bearish signal, prices rise instead of falling and either close or make two consecutive daily highs above the stop-loss level, without detecting any bullish pattern, the stop-loss is triggered.