Understanding the Identical Three Crows

What is the Identical Three Crows?

The Identical Three Crows is a bearish reversal pattern consisting of three consecutive long black (bearish) candlesticks. Each candle opens within the body of the previous candle and closes lower, creating a strong bearish signal. This pattern indicates a potential reversal in an uptrend.

How is the Identical Three Crows Identified?

The Identical Three Crows pattern is identified by:

1. Three Consecutive Black Candles: Each candle is bearish and opens within the body of the previous candle.
2. Lower Close Each Day: Each subsequent candle closes lower than the previous candle.

When to Use the Identical Three Crows

The Identical Three Crows pattern is used to:

• Spot Bearish Reversals: When seen after a strong uptrend, it may signal a reversal to a downtrend.
• Confirm with Other Indicators: Combining this pattern with other technical indicators can enhance its reliability.

Formula Example

To identify the Identical Three Crows pattern:

1. Check for Consecutive Bearish Candles:
   • Condition: Three consecutive candles must be bearish.
2. Verify Opening and Closing Prices:
   • Condition: Each candle opens within the body of the previous candle and closes lower.

For example:

• First Candle: Opens and closes within the body of the previous uptrend candle.
• Second Candle: Opens within the body of the first candle and closes lower.
• Third Candle: Opens within the body of the second candle and closes lower.

Parameters

The parameters for identifying the Identical Three Crows pattern include:

• Data: Defines the type of data to use for the pattern.

  • Value: ohlc
  • Description: The pattern uses Open, High, Low, and Close prices.

• Previous N Candles: Number of preceding candles to check.

  • Default Value: 1
  • Min Value: 1
  • Max Value: 300
  • Description: Checks for the Identical Three Crows pattern in the last N candles.

Conclusion

The Identical Three Crows pattern is a powerful bearish reversal signal. It suggests a strong downtrend following a period of upward momentum. Traders should use this pattern in conjunction with other technical analysis tools to confirm its validity.