An upside-gap two crows (what a mouthful) is illustrated in Exhibit 6.30. The upside gap refers to the gap between the real body of the small black real body and the real body preceding it (the real body which precedes the first black candlestick is usually a long white one). The two black candlesticks are the “crows” in this pattern. They are analogous to black crows peering ominously down from a tree branch. Based on this portentous comparison, it is obviously a bearish pattern. An ideal upside-gap two crows has the second black real body opening above the first black real body’s open. It then closes under the first black candlestick’s close
There is a related pattern that looks something like an upside-gap two crows. Unlike the upside-gap two crows, it is a bullish in a rising market. As such, it is one of the few candlestick continuation patterns. It is called a mat-hold pattern (see Exhibit 6.31). This pattern occurs in a bull market and is a bullish continuation pattern. The first three candlesticks are similar to the upside-gap two crows but another black candlestick follows. If the next candlestick is white and gaps above the last black candlestick’s upper shadow or closes above the last black candlestick’s high, then buying is warranted. This pattern can have two, three, or four black candlesticks. The upside gap two crows and the mat-hold are relatively rare.
Exhibit 6.32 is a good example of this type of upside-gap two crows pattern. In early February, the two crows flew above a long white candlestick. This pattern called an end to the rally which had begun a month earlier.
In Exhibit 6.33, one can see that on November 27, copper pushed ahead via a long white session. New highs on the two following sessions failed to hold. The second black candlestick session made this into an upside-gap two crows pattern. The market slid until a doji star and a tweezers bottom built a platform for another leg higher.
Exhibit 6.34 is a classic example of the rare mat-hold pattern. A strong white candle followed by a black candlestick that gaped higher. Two more small black candlesticks followed with the white candlestick completing the mat-hold pattern. Note how this pattern is not too much different from the upside-gap two crows (remember the mat hold can also have two, instead of three, small black candlesticks just as the upside-gap two crows has). The main difference is the appearance of the white candlestick at the end which turns the pattern bullish. Thus, for an upside-gap two crows, I suggest you place a stop on a close above the second black candlestick’s high.