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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's Three Black Crows

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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 05/26/2017
21,080 -2.67 0.0%
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720 -0.08 0.0%
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15.4%
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Tom's Targets    Overview: 05/15/2017
21,400 or 20,450 by 06/01/2017
9,500 or 8,700 by 06/01/2017
730 or 700 by 06/15/2017
6,350 or 6,000 by 06/01/2017
2,450 or 2,375 by 06/15/2017

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

Three Black Crows Candlestick: Summary

The three black crows candlestick is a pattern with definite identification rules or guidelines. Not any three black candles in a downward price trend will qualify. The pattern acts as a bearish reversal of the upward price trend and the overall performance is outstanding.

A check of the performance over 10 days shows some startling results: Do not trade this if the breakout is downward. Only upward breakouts are worth considering. If you remove the 10 day restriction, then the worst performance comes from three black crows in a bull market, regardless of the breakout direction.

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My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

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Three Black Crows Candlestick: Important Results

Theoretical performance: Bearish reversal
Tested performance: Bearish reversal 78% of the time
Frequency rank: 60
Overall performance rank: 3
Best percentage meeting price target: 36% (bear market, up breakout)
Best average move in 10 days: 13.31% (bear market, up breakout)
Best 10-day performance rank: 2 (bear market, up breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal three black crows candlestick
Three Black Crows
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Three Black Crows Candlestick: Discussion

The three black crows candlestick acts as a bearish reversal 78% of the time. The reason for such a high number is that a close below the bottom of the candle pattern will mark it as a bearish reversal, but price has to climb and close above the top of it to score it as a bullish continuation. With price ending near the candle's low, it is much easier for a downward breakout than an upward one to occur.

The overall performance rank is 3 and that is due, in part, to the large moves price makes after an upward breakout. In a bear market, for example, the best average move 10 days after the breakout is a rise of 13.31%. I consider 6% as a good move, so the three black crows double that. However, the result is based on just 66 samples. In fact, instead of the 20,000 candle patterns that I like to see, I found only 2,660 out of over 4.7 million candle lines.

Three Black Crows Candlestick: Identification Guidelines

CharacteristicDiscussion
Number of candle linesThree.
Price trend leading to the patternUpward.
ConfigurationLook for three tall black candles that appear in an upward price trend. Candles 2 and 3 of the pattern should open within the body of the prior candle, and all three should close near their lows, making new lows along the way.
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Three Black Crows Candlestick: Three Trading Tidbits

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. Three black crows candles that appear within a third of the yearly low tend to act as reversals most often -- page 734.
  2. Select tall candles for the best performance -- page 732-73.
  3. Look for an upward breakout from the three black crows -- page 734.

Three Black Crows Candlestick: Example

The three black crows candlestick on the daily scale

The chart shows three black crows circled in red on the daily scale. Price trends upward leading to the start of the candlestick pattern then three tall black candles appears. The last two candles should open within the body of the prior candle, but that is difficult to see on this chart. Price should close at or near the low of each black candle and each one should post a lower low, which they do.

Since this candlestick has no breakout yet, I cannot say if this three black crows pattern is a continuation or a reversal. I will say that one setup that works is to find a three black crows with an upward breakout in an upward price trend.

By that I mean price should be moving higher in a primary trend (longer term), form a three black crows pattern, and then have price close above the top of the candlestick. Since price is resuming the climb along with the longer term trend, it is the ideal situation, and it is more likely to end in a profit.

-- Thomas Bulkowski

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See Also

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Buy a Pentium so you can reboot faster.