BEARISH
TWO CROWS
| Type: | Reversal |
| Relevance: | Bearish |
| Prior Trend: | Bullish |
| Reliability: | Medium |
| Confirmation: | Suggested |
| No. of Sticks: | 3 |
Definition:
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.
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.
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