Upside Gap Two Crows Candlestick Pattern Defined
Since the advent of charts, evaluating stocks has become easy for traders and analysts. All these charts are a part of the technical analysis study in the stock market There are plenty of charts that’ll help traders to study and comprehend the market like bar charts, line charts, candlestick charts, etc. The most widely used one among every trader is the candlestick chart.
Candlestick charts exhibit so many patterns, and one of them is the upside gap two crows. This article details the upside gap two crows candlestick pattern, followed by the difference between the upside gap two crows and three black crows pattern.
Upside Gap Two Crows
The Upside Gap Two Crows is a pattern formed by three candles on the candlestick chart, indicating moderate momentum. Traders can witness the upside gap two crows pattern at the time of uptrend which signals its climax. This could inform reversal lower as a possible danger in the future.
The upside gap two crows candlestick pattern or the bearish reversal candlestick pattern opens up with a big up candle, which has a gap a bit above the candle below it. Later, the larger down candle joins the earlier one in an engulfing pattern. But, you may not witness a reversal lower. Post the upside gap two crows candlestick pattern, the price could oscillate either way or may rally accordingly.
The first candle opens up with a long white real rising body at the time of uptrend. This candle marks the closing price of the candle over the opening price. The second candle is a bearish one and showcases an upward gap irrespective of the higher security gap at the time of opening. This candle generates a gap that’s between the earlier candles opening and closing.
The third small candle engulfs the second one. Here, the third candle shows up above the opening of the second candle. It closes over the close of the first candle and under the close of the second candle. Hence finally, engulfing the previous candle. Additionally, the third candle creates a bearish push between the first and the second candle, thereby setting out to stock the gap. Moreover, this bearish trend created by the third candle reduces the price of the stock.
The Upside Gap Two Crows in the stock market
To best way to know how an upside gap two crows candlestick pattern affects the market or what it tells the traders is by keeping a close eye on the market followed by proper analysis.
Since the pattern tells us that it is bullish, it explains the push for excessive buying in the market. Eventually, this propels the market to rise higher, resulting in creating the first bullish candle. The bullish momentum keeps going while forming a second candle as well. Irrespective of the positive gap created at first, the candle sees a negative end in the market. On the other side, we have bull traders trying to keep the market going upwards to bring an affirmative gap again.
However, again, the bearish trend makes its way into the market but now with intensity. From this, the next candle formed will engulf the earlier one. This calls for the end of bullish power and the rise of a bearish trend in the market.
Difference Between The Upside Gap Two Crows and Three Black Crows Pattern
In the three black crows pattern, the candlestick chart opens up with three candles in a bearish reversal pattern. These candles indicate that the power has moved into the hands of bulls instead of bears.
Both the upside gap two crows and three black crows pattern showcases a similar uptrend reversal. However, they both are slightly distinct from each other. In three black crows, you see three long bearish reversal pattern candles. This takes place during the uptrend in the market where it has gone off-track, giving bears the control and reducing the price of the stock.
Example of How To Use The Upside Gap Two Crows Pattern
A better way to understand any concept is through an example. Let’s consider Apple company’s candlestick chart that portrayed an upside gap two crows candlestick pattern. The chart showed the increasing price of the stock incessantly for the last three weeks. Moving forward, the chart also showed a strong first candle along with a gap between the higher and down candle, engulfing the third candle into the earlier one. Here, the trader has three options in hand:
- Exit by taking a long position in the market
- Exit at the time of the third candle closing
- Go for a short position
Related Articles
Frequently Asked Questions
Ans:In the upside gap two crows pattern, its three bearish reversal bar candles exhibit a slow uptrend motion. It could also be a reversal lower but not very convincingly. While the first black candle opens large, a gap higher into a down candle, the third candle engulfs the second.
Ans: When there’s a bullish trend in the market, traders will exhibit a continuous buying push. This gives rise to a surge in the stock price. Hence, the forming of the first bullish candle in the pattern.
Here, you can see an affirmative gap created in the market, and landing negative with the final candle. This signals bears took the power over the bulls and thereby continuing the downtrend. However, though you have spotted the upside gap two crows candlestick pattern, a confirmation would bring justice to the traders’ table. It’s suggested to opt for other technical analysis methods along with the upside gap two crows candlestick pattern for better outcomes.