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The Upside Gap Two Crows reversal pattern appears on a chart only during an upward trend. This candlestick pattern represents a gap between the second small black candle (third day) and the first body preceding it. If you have a vivid imagination, you could see two crows in these candles. That is how it got its name. The pattern is of bearish character.
The pattern is formed when the open price of the second black candle is above the open price of the first black candle and the close price is below the close price of the first black candle. There should be a gap between white and black candles. The third candle should open above the second one and engulf it.
How to determine Upside Gap Two Crows?
- The uptrend continues with a long white candle;
- The black candle is formed with a gap up following the white candle;
- The open price of the second black candle is above the open price of the first black candle, while its close price is below the body of the first black candle. The body of the second black candle engulfs the first black candle;
- The close price of the second black candle is above the close price of the large white candle.
Scenario and psychology
Like other bearish formations, the Upside Gap Two Crows starts with a white candle. The next day, trading opens with a gap up, but the price does not grow and closes below the open level, forming a black candle.
The next session is opened higher, but then the price falls and closes below the preceding close level. The close price is still higher than the close price of the first white day. At this moment, bullish sentiment fades away.
Flexibility
The Upside Gap Two Crows pattern is rather strict. In case the price closes inside the body of the white candle on the second black day, the formation became the Two Crows.
Development
The pattern may be brought to a single candle, the white body of which is longer than the white body of the first day, just like the upward shadow.
Before taking any steps based on this formation, wait for its confirmation as the pattern is not completely bearish.
Similar patterns
The Upside Gap Two Crows differs from the Mat Hold Pattern by the fact that the black body of the third day cannot open below the open price of the second day and stay above the body of the first day within the Upside Gap Two Crows. Two first days of the formation could become the Evening Star depending on what happens on the third day.
