ASX Charting Course

Chapter 50 Candlesticks

Formations VII

Three Black Crows

The Three Black Crows formation is a sign that a bull market could be reversing. It consists of three down days where each day has a lower low and lower high. The close should be close to or lower than the close for the previous day and each open should be within the real body of the previous day.

A bull market is required to generate this signal. It may occur over and over again in a bear market, one would expect that, but when it shows up in an up trend, it presents as a pretty strong signal.

Fig 88

Three White Soldiers

Three White Soldiers is a reversal signal in a bear market. As one would expect it is the opposite of three black crows. It requires a bear market and is made up of three consecutive white candles or up days, where the close is progressively higher and the open is within the body of the previous day.

Three days of higher highs and higher lows is a good definition of a trend, in this case it signals a change in trend.

Fig 89

Falling Three Methods

The Three Methods falling formation is a bearish continuation pattern. It signals continuation of a bear market trend.

The first candle is quite strong, in which case it should have a long black body. The next three candles that follow are small relative to the first candle and in the opposite direction, in this case up days. The last candle, the fifth candle, is another long black candle that should close below the real body of the first candle.

Fig 90

Rising Three Methods

This formation is the opposite of the falling three methods. It is a continuation pattern in a bull market trend.

The first candle is a long white candle, an up day. The next three candles are down days, but completely engulfed by the body of the first candle. The closes must be within the first real body and the low from the first candle must remain intact during the formation.

The final candle should move to make a new high and closes above the real body of the first candle. This then completes the formation and signals higher prices.

Fig 91

Craig MacLean is a Futures Adviser Licensed under the Australian Securities Commission, Corporations Law. The writer accepts no responsibility for any losses incurred from any action or inaction derived from the advice in this report.



ASX Charting Course
Chapter 50 Candlesticks Formations VII
Three Black Crows The Three Black Crows formation is a sign that a bull market could be reversing. It consists of three down days where each day has a lower low and lower high. The close should be close to or lower than the close for the previous day and each open should be within the real body of the previous day. A bull market is required to generate this signal. It may occur over and over again in a bear market, one would expect that, but when it shows up in an up trend, it presents as a pretty strong signal.
Fig 88
Three White Soldiers Three White Soldiers is a reversal signal in a bear market. As one would expect it is the opposite of three black crows. It requires a bear market and is made up of three consecutive white candles or up days, where the close is progressively higher and the open is within the body of the previous day. Three days of higher highs and higher lows is a good definition of a trend, in this case it signals a change in trend.
Fig 89

Falling Three Methods The Three Methods falling formation is a bearish continuation pattern. It signals continuation of a bear market trend. The first candle is quite strong, in which case it should have a long black body. The next three candles that follow are small relative to the first candle and in the opposite direction, in this case up days. The last candle, the fifth candle, is another long black candle that should close below the real body of the first candle.
Fig 90
Rising Three Methods This formation is the opposite of the falling three methods. It is a continuation pattern in a bull market trend. The first candle is a long white candle, an up day. The next three candles are down days, but completely engulfed by the body of the first candle. The closes must be within the first real body and the low from the first candle must remain intact during the formation. The final candle should move to make a new high and closes above the real body of the first candle. This then completes the formation and signals higher prices.
Fig 91
Craig MacLean is a Futures Adviser Licensed under the Australian Securities Commission, Corporations Law. The writer accepts no responsibility for any losses incurred from any action or inaction derived from the advice in this report.