Upside Gap Two Crows
The Upside Gap Two Crows Pattern is a strong 3 candle bearish reversal pattern occuring during an uptrend.
The first candlestick is a long white candlestick at the end of an uptrend.
The second candlestick is a black candle that creates the upside-gap. The black candle gaps open and pulls back before the end of the day. Even though it has pulled back, it did not fill the gap.
The third candlestick opens above where the second candle opened. It can not hold at these levels and pulls back before the end of the day. Closing lower than the previous day, it has engulfed the small black candle's body. However, it still did not close the gap from the white candle on the first day.
Rules:
- The upward trend has been fairly consistent for a good period of time.
- A long white candle continues the uptrend (the first candlestick in the pattern).
- The real body of the second day is black while gapping up and not filling the gap.
- The third day opens higher than the second day's open and closes below the second day's close. This produces a black candle that completely engulfs the second day's small black candle.
- The close of the third day is above the close of the first day's long white candlestick.
Signal Strengtheners:
- Confirmation for the Bearish Upside Gap Two Crows Pattern may be suggested. If prices fail to regain high ground on the fourth day , lower prices should be expected.
General Analysis:
After a strong uptrend has been in effect, the atmosphere is bullish. The market displays a higher opening with a gap. The new highs of the day cannot hold. Before the end of the day, the Bears step in and take the price back down and the market forms a black candlestick, but the gap up from the white candle was not filled, so the second day closes down, but still above the previous day's high. However the Bulls still comfort themselves by the fact that the close on this black candlestick day is still above the prior day’s close.
The third day however increases the bearish sentiment displaying another new high but failing to hold these highs until the close. Also the day closes below the second day’s close, which concerns the Bulls even more. If the volume of trading was high, this could indicate the end of the Bullish trend and a reversal.
While a very strong signal, confirmation might be warrented by another Black Candlestick day on the fourth day.
