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Introduction

As the name Three Black Crows suggests, this pattern consists of three consecutive black candles. A typical Three Black Crows formation preferably owns the following characteristics.

• The real bodies of the candles are not small and even relatively long
• The open of each candle falls into the real body of the previous candle
• The close of each candle is below the close of the previous candle
• The lower shadows of the candles are very small or do not exist at all (shaven bottom candles)
• The pattern appears at the top of a relatively sharp rally in the market

If a Three Black Crows pattern owns almost all of these characteristics you may expect a serious bearish movement in the market (at least for the next few upcoming candles). The following image shows a pattern that shows many of these characteristics.

The sharp rally prior to the appearance of this pattern is a key feature that could confirm the bearish direction right after the third black candle.

If the black candles are very long then it may be too late to enter a short trade. This could be a significant sign of the market oversold. You may use your own judgment and experience to decide whether the candles are considered too long or the right size. One approach is to compare their sizes with other candles in the chart.

If you see the pattern after a consolidated market you may conclude a bearish movement as well. I, however, strongly suggest using other techniques to confirm such conclusion.

There are many occasions that this combination results in a continuation bearish move or a reversal bullish. It is important to use other techniques to confirm this pattern.

Locating the "Three Black Crows" Formation in a Chart

The recognition of this pattern is subject to your judgement. I have developed an indicator that considers major objective characteristics of the Three Black Crows. For example the indicator considers the fact that we are dealing with three black candles that each closes below the previous one (see image). You also need to consider other specifications of this pattern to decide whether the pattern is actually a Three Black Crows or not.

Download the "ThreeBlackCrows" Indicator [download]

Click here to download the compiled version of this indicator. I have designed the indicator for MetaTrader 4 (MT4). If you are not using the latest build of MT4 then you may encounter technical problems. Click here for more information and possible solutions.

If you are not familiar with using custom indicators then click here.

If you are one of my MQL students you may download the source code of this indicator from your training site. Click here for more information about my MQL training program. You may also click here for more information about different options that I offer for training MQL (one of them is absolutely free).

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Previous Candlestick Lessons:

Lesson 01: An Introduction to Candlestick Charts

Lesson 02: Umbrella Lines - Reversal

Lesson 03: Doji Candles - Part 1

Lesson 04: Doji Candles - Part 2

Lesson 05: The Spinning Top Candle

Lesson 06: The Engulfing Pattern

Lesson 07: Dark-cloud Cover

Lesson 08: Bullish Piercing Formation

Lesson 09: Window - Falling and Rising

Lesson 10: Morning Star a Bullish Reversal Pattern

Lesson 11: Evening Star a Bearish Reversal Pattern

Lesson 12: Shooting Star a Bearish Reversal Pattern

Lesson 13: Doji Star a Reversal Pattern

Lesson 14: Inverted Hammer Bullish Reversal

Lesson 15: Harami

Lesson 16: Belt-Hold Lines (Bearish and Bullish)

Lesson 17: Tweezers Top and Bottom Reversal Patterns

Lesson 18: Three Advancing White Soldiers