Three Black Crows: Bearish Reversal Pattern
The three black crows pattern is a three-candle bearish reversal formation that signals strong selling pressure after an uptrend.
What Are Three Black Crows?
The three black crows is a three-candle bearish reversal pattern that appears after an uptrend. It's the bearish counterpart to the three white soldiers. The name comes from traditional Japanese candlestick analysis, where "black" referred to filled (bearish) candles. The pattern shows three consecutive strong bearish candles, reflecting sustained selling pressure and a clear shift in control from buyers to sellers.
What the Pattern Looks Like
Three black crows have these characteristics:
- Three consecutive bearish (red) candles
- Each candle opens within the previous candle's body and closes lower than the previous close
- Each candle has a small lower shadow, indicating sellers held control into the close
The candles should be reasonably large, with each close making a new low. The pattern is most powerful when the bodies grow progressively larger, showing accelerating downside momentum.
What It Signals
Three black crows signal that sellers have taken firm control after a period of advance. The sustained decline over three sessions indicates strong supply and a likely trend reversal to the downside.
| Signal Strength | Condition |
|---|---|
| Strong | Large bodies, growing size, high volume |
| Moderate | Average bodies, normal volume |
| Weak | Small bodies, low volume |
How to Trade It
- Verify the uptrend. The pattern requires a preceding advance to be valid.
- Enter on the third candle. Traders often enter short when the third candle closes, ideally with strong volume.
- Place your stop-loss above the high of the first candle.
- Target recent support. Aim for the most recent swing low.
Trading Example
A stock rallies from $30 to $48 over a month. On day 32, a strong red candle opens at $48 and closes at $46. Day 33 opens at $46.20 and closes at $44.30. Day 34 opens at $44.50 and closes at $42.20. This three-candle decline completely reverses the prior momentum and signals a new downtrend.
Common Mistakes
- Treating it as valid without a prior uptrend
- Shorting into obvious support, which can stall the decline
- Entering too late when the move is overextended
When to Be Cautious
Three black crows can be less reliable if the third candle has a long lower shadow (showing buyers rejecting lower prices) or if the pattern forms in a tight sideways range without a clear uptrend. Always check underlying support before shorting.
The three black crows pattern is popular among swing traders because it provides clear visual evidence of a trend change and offers well-defined entry and stop-loss levels for managing risk on short positions.