Leavitt Brothers: Education - Candle Stick Patterns

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	Abandoned Baby
	Advance Block
	Belt Hold
	Breakaway
	Dark Cloud Cover
	Deliberation
	Doji Star
	Dragonfly Doji
	Downside Gap Three Methods
	Downside Tasuki Gap
	Engulfing
	Evening Doji Star
	Evening Star
	Falling Three Methods
	Gravestone Doji
	Hanging Man
	Harami
	Harami Cross
	Identical Three Crows
	In Neck
	Kicking
	Meeting Lines
	On Neck
	Separating Lines
	Shooting Star
	Side By Side White Lines
	Three Black Crows
	Three Inside Down
	Three Line Strike
	Three Outside Down
	Thrusting
	Tri Star
	Two Crows
	Upside Gap Two Crows

Three Black Crows

Pattern: reversal
Reliability: high

Identification
Three long black days occur with each successive open being within the body of the previous day and each successive close being below the previous day's and near the day's low.

The Psychology
In an uptrend or within a bounce of a downtrend, the three long black candles speak for themselves. If volume accompanies the move, the reliability of the pattern increases significantly.

The bearish Three Black Crows is similar to the bearish Identical Three Crows, bullish Concealing Baby Swallow, bullish Ladder Bottom and bullish Three Stars in the South and could be the beginning of the bearish Three Line Strike.

Three Black Crows is a solid reversal pattern whose only flaw is the fact that it takes three down days to form, so going short after its formation may be chasing the stock. You can see above SUNW dropped 8 points (about 12%) before the pattern was completed. Exiting a long at that time was a little late to enter a short carried higher risk.

BMC presented a more favorable way to play a bearish Three Black Crows formation. The third candle also broke support. That's a nice one-two combination and because the prudent trader will often wait until support it taken out, you don't feel like you are chasing the play.

After gapping down, CKFR made a valiant attempt at filling the gap, but that attempt ended with a bearish Three Black Crows formation. Notice the previous low held, so that's here you take profits.

Here's an example of a bearish Three Black Crows pattern that failed miserably...and it formed at resistance (40). They don't always work!!

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