When was the last time you thought you traded a pattern perfectly and just to have it go against you?

It happens to me all the time… And it’s just part of being a trader.

So that got me thinking one night while sipping a glass of my favorite booze…

What if we did the opposite of what the strategy suggested? Now the wheels are really spinning.

But…there are too many chart patterns that this can apply toward.

Not to mention – I just doubled up my research in the mornings.

There’s just not enough time to do it all.

This is why traders who want to take it to the next level need to focus on only a handful of chart patterns that really work.

Less is always more when it comes to trading.

So that’s why I am going to share a variation of a well-known trading system with you today.

 

The Three Black Crows pattern

According to most trading books, the Three Black Crows is a bearish trend reversal Candlestick Pattern.

In order to recognize the Three Black Crows pattern:

  • 3 consecutive red candles
  • The increasing size of red candles
  • Little to no wicks 

Here’s an example:

 

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Now you are probably thinking… “this looks like a great bearish Candlestick pattern and it’s time to short the markets.”

And you’re not wrong!

However, that’s there is a new way to look at it that is a total game-changer.

 

Three Black Crows pattern fools the best traders 

Just because the market closed lower 3 days in a row doesn’t mean that the uptrend will reverse.

But sometimes it does… and that’s what keeps traders guessing.

Because the context of the market is more important than any Candlestick Patterns you’ll come across.

The 3 major market structures are:

  1. Uptrend
  2. Range-bound
  3. Downtrend

Here’s the thing…

WHY would a stock just simply turn around because of 3 candles appear in this magical order?

Well, it doesn’t! The market doesn’t need to move just because a few red bars came along.

What I mean…

 

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As you can see, the Three Black Crows failed in the uptrend.

And the story is no different for Range-bound markets and Downward markets either!

Truthfully, it doesn’t necessarily matter what the market is, sometimes trading a pattern with the rest of the herd blindly just doesn’t work!

Instead, click here to learn the tried and true strategies from the pros!


How to
really trade the Three Black Crows pattern

Here’s a hint… you do the opposite!

This means you treat the Three Black Crows pattern as a bullish signal – alerting you of potential buying opportunities.

Here’s how I do it:

  1. Price greater than 200 EMA, you are looking for an area to buy stock
  2. Wait for Three Black Crows pattern to form
  3. Best signals are when it forms into another technical area
  4. If profitable, trail at a faster-moving average to fit your trading style (or another technical trailing indicator)

 

Looking at the chart above you can see how the Three Black Crows was actually a bullish signal instead of a bearish signal.


Conclusion

So as you can tell, sometimes going against the herd is actually the right decision… and in this situation the same applies.

To remind you, less is always more when it comes to trading.

This is why pro traders who push it to the next level only focus on only a handful of chart patterns that really work.

To recap: Here’s what you learned today:

  • The Three Black Crows pattern occur after the price has fallen 3 days in a row
  • Unlike all major textbook educational material, the Three Black Crows pattern is a better continuation pattern than a reversal pattern

Click here to learn how I trade a trend reversal using the Three Black Crows

Author: Ben Sturgill

Ben leads two services at RagingBull. IPO Payday can help you pinpoint, position, and profit from IPOs. In Daily Profit Machine Ben guides day and swing traders to profit by trading the SPY Index. Ben hosts the RagingBull.com weekly podcast WealthWise where he shares thoughts on wealth and success with traders, businesspeople, entrepreneurs, and experts to uncover and share the wisdom needed to live a wealthy life.

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