Investor Pattern Recognition Three Black Crows
Symbol |
Recognition |
Three Black Crows In A Nutshell
What this pattern represents is when there are three bearish candles that the open is within the body of the previous, but falls lower making for a large body. When this occurs three times in a row, it typically indicates the bulls have lost control and the bears are taking over.
Many people are technical traders and analysts, which means they study the price patterns of the chart using candlesticks. Always looking for a pattern or trend to give them direction, a pattern that many could be looking for is the three black crows pattern.
Closer Look at Three Black Crows
There are a few ways to read into this, and the first one is that the bulls have lost momentum, simply put. The buyers no longer feel this is an acceptable price to purchase the stock and the people taking profit or exiting out number them. You have to then look and see if there is a fundamental issue or if this is just a pure technical play, because deciding that can help determine your next move.
Secondly, this pattern may not always be true and if that is the case you will want to be cautious of other technical patterns that may arise. It could be something simple that bears did not have enough power to continue and the bulls stepped back taking over control of the chart.
Lastly, if this occurs on a larger time frame such as the monthly or weekly, it could indicate a longer term trend change. Keep an eye out those because it could just be short term sell of, meaning the trend is still bullish.
Using this with other indicators and directional indications can help you to determine the strength and the odds of this candle pattern being true. Tools such as Bollinger Bands, standard deviation, and stochastic can help you to narrow in on a trend shift.
Test this on a demo account first because there is no sense in wasting money on testing a new pattern analysis. If you get stuck, the Internet is loaded with tools and examples to help you get going. You may find that it doesn’t fit your current investing style and that’s alright, but now you will at least have the knowledge in your back pocket to use later down the road.
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