What is the 3 black crows candlestick pattern? Effective trading strategy

EducationAugust 30, 2021

Udemy.com – Top Online Cryptocurrency Courses from $9.99 Get now!

What is the 3 black crows candlestick pattern? Effective trading strategy. This candlestick pattern usually appears after an uptrend, and some traders consider it to signal a possible trend reversal. We will learn about these issues in the article below.

What is the 3 black crows candlestick pattern?

The Three Black Crows pattern (also known as the Three Black Crows) consists of three consecutive bearish red candles. Each candle has a closing price equal to or close to the lowest price in that candle and an opening price close to the closing price of the previous candle.

The three black crows candlestick pattern is often formed after an uptrend and is believed by some traders to be a trend reversal.

However, a school also believes that this is just a corrective signal for the price to continue to increase strongly.

How to correctly identify the 3 black crows candlestick pattern?

To correctly recognize the three black crows candlestick pattern, you need to confirm some of the following characteristics:

  • The 3 candles in the pattern must be red (bearish) with a long body and a short or no shadow.
  • The length of the 3 candles is usually close to the same, or the next candle is longer than the previous one.
  • These patterns must form after an uptrend or a bullish correction in a downtrend.
  • The opening price of the following candle must be higher than the closing price of the previous candle or within the previous candle.

Some commonly used trading strategies of traders.

Use the 3 black crows candlestick pattern to enter a sell order

Step 1: Confirm the reversal signal in the price chart.

* See more: The complete guide Binance from a to z

The three black crows candlestick pattern is confirmed and has a high degree of credibility only when confirmed by the reversal signal. Therefore, you must use technical analysis methods to confirm this signal before trading with this candlestick pattern.

You can also confirm trend reversal signals by the following 2 factors:

  1. The previous bottom was broken
  2. There is 1 high and 1 lower low than the previous high and low.

Step 2: Place a sell order

  • Place a sell order just below the 3rd candle.
  • Stop Loss: Placed at the nearest peak before the formation of the 3 crows pattern
  • Take Profit: Set at the previously formed support level.

Combine the MA20 indicator to trade with the 3 black crows candlestick pattern

When using candlestick patterns for trading, it is possible to encounter unconfirmed signals. Therefore, to confirm a trading opportunity, you need to combine it with another indicator to confirm the trend. Here we use the MA20.

The order entry rules are as follows:

When the 3 black crows pattern is formed, if the price crosses the MA20 indicator, a confirmed downtrend could begin. Then you enter the SELL order as above.

3 black crows candlestick pattern

How to find a buy signal with the three crows candlestick pattern

To trade according to this strategy, you use MA200. With followers of this strategy, you only enter buy orders or stay out of the market when the signal is unclear. The transaction is as follows:

3 black crows candlestick pattern

  • If the price is above the MA200, the price completes 3 black crow candles
  • Enter a buy order on the next candle.
  • Take profit when RSI crosses to 60.
  • Only use 10% of capital for this trading strategy.

Conclusion

Above is the recognition and trading strategy with the three black crows candlestick pattern. With this article, you can use it to find sell entry signals. However, for effective trading, the application of candlestick patterns can be difficult to recognize. If you are a newbie, you can learn more technical indicators to build a more suitable trading strategy for you.

Investiki.com

guest
0 Comments
Inline Feedbacks
View all comments