Upside Gap Two Crows

DEFINITION of 'Upside Gap Two Crows'

A bearish market reversal signal in technical analysis. The upside gap two crows pattern is a three-day formation on candlestick charts that typically develops in the following manner:

Day 1 - A bullish day that continues the uptrend, represented by a long white candlestick, which indicates that the closing price of the index or security is well above the opening price.

Day 2 - A bearish day despite the index or security gapping higher at the open, represented by a small black or colored candlestick.

Day 3 - A second bearish day, with the index or security opening higher than the Day 2 open, but closing below the Day 2 close and above the Day 1 close. This is visually represented by a bigger black or colored candlestick that "engulfs" the Day 2 candlestick.

BREAKING DOWN 'Upside Gap Two Crows'

The upside gap two crows is viewed by chartists as a somewhat ominous pattern, since it potentially signals that the index or security may be rolling over as its upward move ends and a downtrend commences. The rationale for this interpretation is that despite two stronger opens (on Days 2 and 3), the bulls have been unable to maintain upward momentum, suggesting that sentiment is turning from bullish to bearish for the index or security.

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RELATED FAQS
  1. How do I implement a forex strategy when spotting a Upside Gap Two Crows Pattern?

    The upside gap two crows is, in theory, a bearish reversal pattern found in both the stock and forex markets. While there ... Read Full Answer >>
  2. How do I build a profitable trading strategy when spotting an Upside Gap Two Crows ...

    The primary factors in the creation of profitable trade strategy based on the upside gap two crows pattern are outside evidence ... Read Full Answer >>
  3. How are Upside Gap Two Crows patterns interpreted by analysts and traders?

    The upside gap two crows is a three-day bearish reversal pattern that signals the end of an existing bullish trend. There ... Read Full Answer >>
  4. How effective is creating trade entries after spotting a Upside Gap Two Crows pattern?

    The reliability of the upside gap two crows reversal pattern is somewhat debatable. Each analyst and trader has his or her ... Read Full Answer >>
  5. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >>
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    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>
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