The Doomsday Upside Gap Two Crows Forex Candlestick Pattern

The Doomsday Upside Gap Two Crows Forex Candlestick Pattern

 

Ominous. Both traders and chartists alike use that word to describe the Upside Gap Two Crows Forex Candlestick pattern. Seeing it on a chart is a sign that a downward trend will replace an upward trend and a security is destined to face the bearish market. Once you notice this Japanese Candlestick pattern formation, however, is there really something to be afraid of?

What Is Upside Gap Two Crows Forex Candlestick Pattern?

Also known as the Shita Banare Niwa Garasu, it is a Japanese candlestick pattern that indicates a bearish trend. It consists of 3 candlesticks: 1 green upward candlestick and 2 red downward candlesticks. By following a 3-day formation, these candlesticks show a reversal signal.

3-day formation:

  • Day 01 – a bullish day; a long, white candlestick appears, which indicates that a security’s closing price will go above the opening price
  • Day 02 – a bearish day; a small, black (or any colored) candlestick appears, which indicates that despite a security’s high gap at the opening price, the trend is likely to go downward
  • Day 03 – a bearish day; a big, black (or any colored) candlestick appears, which indicates the following: (1) a security’s opening price is higher than Day 02’s opening price (2) a security’s closing price is lower than Day 02’s closing price (3) a security’s closing price is higher than Day 01’s closing price

Let’s Talk Logic

The logic behind Upside Gap Two Crows patterns is that with two strong trends, a reversal is likely to happen due to a trend’s incapability of maintaining strong positions consecutively. Particularly, since two strong opening prices for Day 02 and Day 03 have been identified, the upward momentum will come to an end.

At the Start, Middle & End

Upside Gap Two Crows patterns can appear anytime – at the start of a trend, in the middle, and at the end. In spite of its complicated nature, it remains one of the most effective indicators of a trend reversal. Especially upon focusing on tall candlesticks when numbers are reaching their yearly highs, it may not be long before seeing a turnaround. Once you’ve understood every important element, you can expect an upcoming price movement.

What if There Are Three Black Crows?

Unlike an Upside Gap Two Crows pattern, a Three Black Crows or Sanba Garasu pattern is a more stable signal. According to traders and chartists, it may be the better formation since it can help you establish a solid position. It follows that when the trend is down, price movement will continue to decline.