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 are Upside Gap Two Crows patterns interpreted by analysts and traders?

    Learn about the upside gap two crows chart pattern and how analysts and traders interpret this pattern as an indicator of ... Read Answer >>
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    Learn to identify the three black crows candlestick pattern and learn how stock market traders use the pattern to profit ... Read Answer >>
  3. How do I build a profitable trading strategy when spotting an Upside Gap Two Crows ...

    Learn about the upside gap two crows pattern and how this reversal signal is used to create profitable trade strategy, including ... Read Answer >>
  4. How effective is creating trade entries after spotting a Upside Gap Two Crows pattern?

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