Bearish Two Crows Pattern

by · December 31, 2009

BEARISH TWO CROWS PATTERN (BTCP)
bullishness that’s eroded quickly

Characteristics:
1. Market is on an uptrend;
2. Day 1 has a long white stick;
3. Day 2 has a black stick typified by a gap up; and
4. We have a black stick on Day 3 with an opening price that is inside the body of Day 2 and which closes inside Day 1’s body.

Brief Explanation:
In this pattern, the market is in an extended uptrend. There is a gap in the opening of Day 2. The higher opening is succeeded by a lower close. This warns that the rally is weak. Day 3 also opens at a higher price, but not above the open of Day 2. Then prices go down with a close well within Day 1’s body. The Day 3 action fills the Day 2 gap. This shows that the bullishness started to erode fast.

Notes:
1. A confirmation on Day 4 is required to show that the uptrend has reversed
2. The confirmation may be in form of a black stick, a large gap down, o a lower close.