The upside-gap two crows consists of two black candlesticks. If there are three declining consecutive black candlesticks it is called three black crows pattern (see Exhibit 6.35). The three black crows presage lower prices if they appear at high-price levels or after a mature advance. Three crows are also sometimes called three-winged crows. The Japanese have an expression, “bad news has wings.” This is an appropriate saying for the three-winged crow pattern. The three crows are, as the name implies, three black candlesticks. Likened to the image of a group of crows sitting ominously in a tall dead tree, the three crows have bearish implications. The three lines should close at, or near, their lows. Each of the openings should also be within the prior session’s real body. The analyst would also like to see the real body of the first candlestick of the three crows under the prior white session’s high.
Exhibit 6.36 is a good example of a three crows pattern. In mid-June, three black crows appeared. Another three crow pattern shows up a month later in mid July. July’s three crows also was a failure at the highs from June’s three crows near the 33,000 level. This formed a double top. Exhibit 6.37 is another example of this pattern. June 15 was the first of
the three crows. An interesting aspect about these three crows is that the open of the second and third black candlesticks are at, or very near, the close of the prior black candlestick. This is referred to as identical three crows. It is regarded as especially bearish, but it is a very rare pattern.