Three Black Crows: Bearish Reversal Pattern

The Three Black Crows is one of the most ominous bearish reversal patterns in candlestick analysis. This formation of three consecutive bearish candles signals powerful selling pressure and often marks the beginning of a significant downtrend. When this pattern appears at the top of an uptrend, it warns traders that bears have taken decisive control.

What is the Three Black Crows Pattern?

The Three Black Crows consists of three consecutive long bearish (red or black) candles. Each candle opens within the body of the previous candle and closes at or near its low. The pattern shows steadily declining prices with strong selling conviction over three trading sessions.

Three Black Crows Formation Criteria

For a valid Three Black Crows pattern, these elements must be present:

First Candle

• A long bearish candle that appears after an uptrend or consolidation
• Shows initial selling pressure emerging
• Should have a substantial body (not a small candle)

Second Candle

• Opens within the body of the first candle (ideally in lower half)
• Closes lower than the first candle's close
• Should be similar in size to the first candle
• Small or no lower shadow (closes near its low)

Third Candle

• Opens within the body of the second candle (ideally in lower half)
• Closes lower than the second candle's close
• Should be similar in size to previous candles
• Small or no lower shadow (closes near its low)

Psychology Behind Three Black Crows

This pattern demonstrates a powerful shift in market psychology from bullish to bearish:

• Day 1: After a period of buying, sellers step in with conviction. The long bearish candle shows bulls losing control. Longs begin to worry about their positions.
• Day 2: Despite opening with a small gap up into the previous body, sellers push prices lower all day. This confirms Day 1 was not just profit-taking. More longs exit and new shorts enter.
• Day 3: The pattern repeats with another strong bearish day. Bulls capitulate entirely. The consistent decline over three days shows sustained selling pressure, not just a temporary pullback.

How to Trade Three Black Crows

Entry Strategies

Stop Loss Placement

• Above the first candle: Place stop above the high of the first crow for maximum protection
• Above the pattern midpoint: Tighter stop above the middle of the formation
• Above the third candle: Aggressive stop for better risk/reward if confident in the pattern

Profit Targets

• Previous support levels from the prior uptrend
• Fibonacci retracement levels (38.2%, 50%, 61.8% of prior rally)
• Measured move: Height of the three-candle pattern projected downward
• Moving averages as dynamic support targets

Factors That Increase Reliability

Volume Pattern

• Increasing volume on each successive candle is ideal
• High volume confirms strong selling interest
• Low or declining volume weakens the signal

Resistance Levels

Three Black Crows appearing at key resistance levels are more significant:

• Previous swing highs
• All-time highs
• Key moving averages acting as resistance
• Round psychological numbers

Prior Trend

• Pattern is most meaningful after a clear uptrend
• The stronger the prior rally, the more significant the reversal
• Pattern in sideways markets is less reliable

Candle Characteristics

• All three candles should be similar in size
• Small or absent lower shadows (closes near lows)
• Each opens within the previous body, not gapping down
• Bodies should be substantial, not small

Pattern Variations and Quality

Strong Three Black Crows

• All candles close at or very near their lows
• Candles are similar in size
• Increasing volume on each candle
• Appears after clear uptrend at resistance

Weak Three Black Crows

• Candles have long lower shadows
• Third candle significantly smaller than first two
• Declining volume
• No clear preceding uptrend

Three Black Crows Pattern Statistics

Historical analysis shows these approximate success rates:

• Standard Three Black Crows: 70-75% bearish continuation rate
• With increasing volume: 75-80% success rate
• At key resistance levels: 78-82% success rate
• Average decline in 10 days: 5-8%

This is one of the most reliable bearish reversal patterns, especially when combined with other technical factors.

Common Mistakes to Avoid

• Shorting too late: After three strong bearish candles, price may be oversold short-term. Consider waiting for a bounce.
• Ignoring lower shadows: Long lower shadows on the candles reduce reliability, suggesting buying pressure at lows.
• No preceding trend: Three Black Crows in sideways markets often fail.
• Unequal candles: If the third candle is much smaller, it suggests weakening bearish momentum.
• Low volume: Without volume confirmation, the pattern may just be a healthy pullback in an uptrend.
• Tight stops: Stops placed too close to current price will get triggered on normal volatility.

Three Black Crows vs. Similar Patterns

Three Black Crows vs. Three White Soldiers

Three White Soldiers is the bullish opposite: three consecutive bullish candles appearing at downtrend bottoms signal reversal upward.

Three Black Crows vs. Evening Star

Both are bearish reversal patterns, but Evening Star has a small indecision candle in the middle, while Three Black Crows shows uninterrupted bearish momentum.

Three Black Crows vs. Falling Three Methods

Falling Three Methods is a continuation pattern (small bounce candles followed by a large bearish candle), while Three Black Crows is a reversal pattern.

Using Three Black Crows for Position Management

Even if you do not short, this pattern is valuable for managing long positions:

• Exit long positions when confirmed Three Black Crows forms
• Tighten stop losses after the first two crows
• Take partial profits when pattern is developing
• Do not add to long positions during pattern formation

Combining with Other Indicators

RSI Confirmation

Three Black Crows with RSI showing bearish divergence (lower highs while price made higher highs) is a high-probability short setup.

MACD Cross

Pattern combined with MACD bearish crossover adds confirmation.

Moving Average Breakdown

When Three Black Crows breaks below key moving averages (20, 50 MA), the bearish signal strengthens.

Summary

The Three Black Crows is a powerful three-candle bearish reversal pattern that appears at the top of uptrends. It consists of three consecutive long bearish candles, each opening within the previous body and closing at or near its low. The pattern shows sustained selling pressure and strong bearish conviction. For best results, look for the pattern at key resistance levels with increasing volume and after a clear uptrend. All three candles should be similar in size with small or absent lower shadows. This is one of the most reliable bearish reversal patterns when these criteria are met.

Learn more: Three White Soldiers and Evening Star pattern.