Bulkowski’s Identical Three Crows

Written and copyright © 2008-2010 by Thomas N. Bulkowski. All rights reserved.

In my book, Encyclopedia of Candlestick Charts, pictured on the right, I explore the entire range of candlestick patterns from abandoned babies to windows (not exactly A to Z, but you get the idea), in both bull and bear markets, using almost 5 million candle lines in the tests.

The book takes an in-depth look at 103 candlestick patterns and reports on behavior and rank (3 types: reversal rate, frequency, and overall performance), identification guidelines, performance statistics (tables of general statistics, height, and volume), trading tactics (tables of statistics on reversal rates and performance indicators), and wraps each chapter with a sample trade. I share a sliver of that information below. If you like what you read here, then you will love the book. Help support this website and buy a copy by clicking on the above link.

The identical three crows candlestick is one of the better performing patterns, but that is probably due to its height. When price trends lower for three candles in a row -- tall black ones, no less -- almost by definition the trend has changed. The candle is supposed to act as a bearish reversal of the up trend and it does, ranking 4 where 1 is best out of 103 candle types. However, identical three crows are so rare that I found only 921 candle patterns to study, down from the usual 20,000 that I like to see. Thus, the performance numbers are suspect, meaning they could change dramatically should more samples become available.

Important Results

Theoretical performance: Bearish reversal Tested performance: Bearish reversal 79% of the time Frequency rank: 83 Overall performance rank: 24 Best percentage meeting price target: 63% (bear market, up breakout) Best average move in 10 days: 10.03% (bear market, up breakout) Best 10-day performance rank: 3 (bear market, up breakout) All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

Identical Three Crows

Discussion

As I mentioned in the introduction, the identical three crows candlestick pattern acts as a bearish reversal 79% of the time, but that is probably due to the difficulty of price having to close above the first candle in the pattern to achieve an upward breakout. When the breakout is upward in a bear market, performance is some of the best that I have seen. Price doesn’t rise, it soars 10.03% like a helium balloon released from a child’s grasp. That performance gives it a rank of 3 where 1 is best out of 103 candle types.

Identification Guidelines

Three Trading Tidbits

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

1. In an uptrend leading to the identical three crows pattern, expect a downward breakout but a quick recovery -- page 432.
2. Volume gives performance clues -- page 431.
3. Breakouts below the 50-trading day moving average lead to the best performance in most, but not all, market conditions and breakout directions -- page 433.

Example

Shown in the red circle are three tall black candles after a brief upward price trend. The breakout, when price closes below the bottom of the candlestick pattern or above the top of the first candle (including the upper shadow), takes almost a month to occur in this example. Price moves horizontally and then resumes a straight-line run down.

This identical three crows candlestick pattern is composed of three opening black marubozu candles. Those are tall black candles with no upper shadows. Notice how one day closes and the next day opens at a similar price, forming a cascade downward.

Other Examples

• Identical three crows in Dow utilities.

-- Thomas Bulkowski