Three Black Crows: Candlestick Pattern Explained for Traders

2025.03.14 2025.03.14
Understanding Three Black Crows Pattern in Candlestick Trading

Gleb Kabanovhttps://www.litefinance.org/blog/authors/gleb-kabanov/

Trading Forex using technical analysis often involves identifying regularities on price charts. Among various tools, candlestick patterns stand out as one of the most effective methods of this approach.

One particularly notable pattern is the Three Black Crows, which is highly popular among traders. This pattern proves to be especially effective on higher time frames. When utilized correctly, traders can potentially see profits exceeding 5%-7% of their initial deposit. Therefore, this article outlines proven strategies for making the most of this pattern.

Major Takeaways

What is the Three Black Crows Pattern?

The Three Black Crows is a candlestick pattern consisting of three consecutive long-bodied bearish candles that occur after one large or series of white candlesticks.

The Three Black Crows pattern typically reflects the battle between buyers and sellers, highlighting a shift where bears overpower bulls for three consecutive intervals. In its classic form, the pattern consists of three consecutive bearish closes that can be utilized for trading only on daily charts. However, modern traders use it on any time frame, interpreting it as three successive intervals rather than strictly three daily trading sessions.

The pattern warns traders that sellers have gained enough traction to reverse the trend, and they should, at least, stop opening or secure long trades in case of a bearish reversal in the market.

How Is the Three Black Crows Candlestick Pattern Structured?

The Three Black Crows pattern formation involves three stages.

1. Uptrend. Although it is not a part of the pattern structure, the final white candlestick of the upward trend indicates the beginning of the pattern formation.
2. Pattern formation. After the appearance of a white candlestick, which is often large and has no upper wick, the first black candlestick emerges on the chart, indicating the beginning of a medium-term downtrend. This candlestick always closes below the opening of the previous candle. Next, two more consecutive black candlesticks appear, each approximately equal to the first black candlestick. Moreover, all three black candles should have either small lower wicks or no wicks at all.
3. Downtrend. A bearish trend is a result of the sell signal from the pattern and is not part of its structure. As a rule, the length of the downtrend in points exceeds the value of all three bearish candlesticks of the pattern, serving as a reference for setting a take-profit order.

How to Identify the Three Black Crows Pattern

As mentioned above, despite its simplicity, the pattern can be difficult to recognize on a price chart. Thus, you should follow a number of rules to avoid mistakes.

1. The higher the time frame, the greater the probability that the pattern will work successfully.
2. The last white candlestick of an uptrend should have a large body and long upper wick. 
3. The first black candlestick of the pattern should close below the beginning of the previous white candlestick’s body.
4. All three black candlesticks should be approximately equal in size.
5. All three long-bodied bearish candlesticks should have roughly the same small wicks, or no wicks at all.
6. The pattern should consist of long bearish candlesticks, each larger than the last white candlestick.

This is not the complete list of recommendations for identifying the pattern. In fact, trading volume can also help to spot it on a chart. Typically, when the white candlestick closes, trading volume declines, and then it tends to rise again when the first black candlestick emerges.

When Do Three Black Crows Candlestick Patterns Occur?

The Three Black Crows candlestick pattern is a reversal pattern that signals traders about the imminent trend shift. This bearish reversal pattern occurs when the trend is still bullish, indicating a potential reversal. 

When this bearish candlestick pattern forms, it signals that buyers are losing control or that bearish pressure has intensified, potentially triggering a downward reversal. Typically, trading volume declines when the pattern starts to emerge, increasing again when the first bearish candlestick forms.

The Three Black Crows pattern is basically an extension of the Bearish Engulfing and Dark Cloud Cover patterns, which consist of two and three candles, respectively. The third candle in the Three Black Crows formation reinforces the trader’s confidence in a trend reversal.

How to Trade the Three Black Crows Pattern

To successfully trade using Three Black Crows, you need to identify it correctly. To aid you in this, I would like to share my cheat sheet, which often helps me spot and use the pattern profitably.

1. This pattern evolves from two simpler candlestick patterns.
2. A trader gets the first signal when a Bearish Engulfing pattern appears on a price chart. This pattern comprises a white candlestick followed by a black candlestick that fully overlaps it.
3. In the second stage, a Bearish Engulfing pattern evolves into a more complex Black Cloud Cover pattern supported by confirmation from other indicators. During this period, the second black candlestick closes near the low or below the closing price of the first black candlestick.
4. In the third stage, the Dark Cloud Cover transforms into the Three Black Crows pattern by adding a third black candlestick to the structure. It is essential that the third black candlestick also closes below the closing price of the second candlestick.
5. When all the candlesticks are formed, check the wicks. If the wicks of each candlestick are short, and the bodies of black candlesticks are approximately the same, it is the Three Black Crows.
6. Afterward, a short trade can be opened at the closing price of the third black candlestick. The expected profit in pips will be approximately equal to the height of all three pattern candlesticks.

What are Examples of a Three Black Crows Pattern Used in Trading?

Let’s review an example of making a short trade on the USDCAD currency pair using the Three Black Crows pattern.

1. According to the rules of pattern formation, traders should place a pending order to open a short position at the low of the third black candlestick. This setup ensures that a trade will be automatically triggered if a new candlestick opens below this level.

2. A take-profit order is set at the distance equal to the combined length of the three bearish candlesticks. A stop-loss order can be placed above the high of the first black candlestick.

3. As shown on the chart, the first candle after the pattern formation triggered a short trade, with the opening price remaining largely unchanged since the order was placed.

4. Stop-loss and take-profit orders remained unchanged, as they were set before the pending order was triggered.

5. In the first phase, the trade experienced a drawdown as the price started to rise. However, it did not reach the stop-loss level, making it sensible to wait for the downtrend continuation, holding the trade open.

6. After a while, the price reversed downward and, with several sharp moves, almost reached the take-profit level.

7. There was no point in waiting a few pips for the closing price. Thus, the trade was closed manually, securing 96% of the expected profit.

8. The trade was executed on the H1 time frame. However, on higher time frames the profit will be much higher.

Three Black Crows vs. Three White Soldiers

The Three Black Crows and the Three White Soldiers candlestick patterns are similar. The key distinction lies in their market impact. The Three Black Crows signal a downward reversal, while the Three White Soldiers indicate a potential change to an uptrend.

1. The Three Black Crows formation begins with the Bearish Engulfing pattern, and the Three White Soldiers formation starts with the Bullish Engulfing pattern.
2. In the second stage, the Three Black Crows transform into the Dark Cloud Cover, and the Three White Soldiers evolve into the Piercing Line pattern.
3. The Three Black Crows candlestick pattern forms at market highs when buying pressure weakens, allowing sellers to take control and shift the trend downward. Thus, it is a bearish reversal pattern.
4. The Three White Soldiers pattern appears at market lows when selling pressure is fading, and the trend reverses upward. So, this is a bullish reversal pattern.

What is the Success Rate of the Three Black Crows Candlestick Pattern?

Originally, this pattern was identified and used exclusively on daily charts, as lower time frames were not available back then. Today, traders have adapted it for H4 and lower time frames. However, this has reduced its reliability.

Experienced traders do not use the pattern for day trading. Nevertheless, its two modifications—Three Crows and Three Buddhas—are widely spread.

Both patterns are variations of the Three Black Crows and Three White Soldiers but act as trend continuation patterns rather than reversal ones. These modified versions offer greater accuracy, with a signal reliability of nearly 85%, compared to just 61% for the original patterns.

What are the Benefits of the Three Black Crows Candlestick Pattern?

The classic Three Black Crows candlesticks serve to confirm a market reversal signal and have several benefits:

1. The pattern frequently appears on the price chart. Since the Three Black Crows is a simple sequence of Japanese candlesticks, it can be found on any chart several times a day.
2. The pattern can be applied to any trading instrument. Although the pattern was developed for the stock market, there are similar patterns on currency charts, and therefore, it can be used to trade any asset.
3. The pattern includes predetermined levels for placing orders. Since it is based on the opening and closing prices of candlesticks, stop-loss and take-profit orders are aligned with these points, too, which facilitates following risk management rules.

Limitations of Using the Three Black Crows

When discussing the limitations of this pattern, it is important to highlight that the list below characterizes the standard pattern and does not describe its modifications.

1. Low signal reliability. The pattern is less effective on time frames lower than daily. For example, on M5 and M15 time frames, its reliability falls short of even 60%.
2. In order to recognize this pattern correctly, you need to know other patterns. Besides, the pattern can often be misidentified because of the size of candlestick wicks or bodies.
3. A precise trade can only be executed manually. Since the entry point is at the closing price of the third black candlestick, you should enter the trade at the current market price. However, this can be inconvenient due to time zone differences.
4. The pattern cannot be used effectively as a signal to enter the market. Initially, the pattern served as a simple confirmation of changing market sentiment. Thus, trading based solely on this pattern involves a high risk of false signals. Therefore, traders often use this pattern in conjunction with other technical indicators or chart patterns.

Conclusion

Trading candlestick patterns is a widely favored approach among traders with limited capital. These patterns are relatively simple to recognize on a candlestick chart and often come with straightforward trading rules. Besides, the Three Black Crows candlestick pattern is quite common. You can develop an effective trading strategy by learning to identify this pattern accurately.

Follow a few simple rules to make the candlestick strategy even more effective. First of all, focus only on patterns that appear on higher time frames. The Three Black Crows pattern is most effective on the D1 and H4 charts. Additionally, you should not always wait until the price reaches a take-profit order. If the price moves in the favorable direction by more than 80%, it is often better to close the trade manually rather than relying on the take-profit order.