Three Black Crows
The three black crows candlestick pattern is formed when the market makes three consecutive bearish candles with lower lows. The three black crows pattern is formed at the top of the price chart right after a bullish rally.
The initial bullish rally in the three black crows creates a sense of optimism among investors, but the subsequent three consecutive bearish candles with lower lows suggest that the bears have taken control of the market. This pattern indicates a potential reversal of the uptrend.
According to a study titled âAn Analysis of Candlestick Patterns in Market Forecastingâ by the research team at the Technical Analysis of Stocks & Commodities (TASC) magazine, the Three Black Crows pattern has a success rate of approximately 78% in predicting bearish reversals.
Rising Three
The rising three candlestick pattern is a bullish continuation pattern. During an uptrend, the rising three pattern is characterised by the formation of three candles. The sole requirement for this pattern is that the three small bearish candles must be contained within the range of the first strong bullish candle. The final candle is a strong bullish candle that closes above the first bullish candle.
The rising three pattern is formed when the market is in an uptrend, and the bulls maintain their momentum despite a brief pause. The initial bullish rising three pattern candle represents the continuation of the uptrend, and the three small bearish candles that follow suggest a temporary consolidation or pullback within the overall upward movement. The confirmation of an upside trend is considered if the final bullish candle breaks and closes above the close of the first bullish candle. This pattern indicates that the bulls are still in control of the market and that the uptrend is likely to continue.
According to a study conducted by the Financial Markets Research Center at Vanderbilt University, published in their report titled âCandlestick Patterns and Their Predictive Power in Financial Markets,â the Rising Three pattern has a success rate of approximately 74% in predicting bullish continuations.
. Falling Three
The falling three candlestick pattern is a bearish continuation pattern. The falling three pattern consists of three candles and it forms during a downtrend. The only condition of this pattern is that the three small bullish candles must be contained within the range of the first strong bearish candle. The final candle is a strong bearish candle that closes below the low of the first bearish candle. This final setup is considered as a confirmation of a downtrend.
According to a study published in the âJournal of Technical Analysisâ by Dr. Stephen W. Bigalow and his research team, titled âThe Predictive Power of Candlestick Patterns in Financial Marketsâ the Falling Three pattern has a success rate of approximately 72% in predicting bearish continuations.
. Tasuki Gap
The Tasuki Gap is a candlestick pattern used in technical analysis to indicate a potential continuation of a market trend. Tasuki Gap patterns can appear as either an Upside Tasuki Gap, which signals a bullish continuation during an uptrend, or a Downside Tasuki Gap, which indicates a bearish continuation during a downtrend. Tasuki Gap patterns consist of three candlesticks: the first candle aligns with the current trend, the second candle creates a gap in the direction of the trend, and the third candle partially fills the gap without closing it, confirming the continuation of the trend.
The psychology of the Tasuki Gap reflects a transition in market sentiment, capturing the emotional dynamics between buyers and sellers. Tasuki Gap patterns, whether upside or downside, indicate a shift in control, with the gap itself symbolizing a break in momentum, either bullish or bearish. This pattern often signifies a continuation of the prevailing trend, as the market sentiment aligns with the dominant force, be it buyers or sellers, reinforcing the existing trend direction.
According to the âEncyclopedia of Candlestick Chartsâ by Thomas N. Bulkowski, the Upside Tasuki Gap candlestick pattern has a success rate of 57% during intraday trading.
. Mat Hold
The Mat Hold pattern is a candlestick formation that signals a continuation of the prevailing trend, typically occurring in the middle of an uptrend or downtrend. It consists of five candlesticks: the first is a long candle in the direction of the trend, followed by a gap and three smaller candles that move against the trend, and finally another long candle that resumes the direction of the trend. This pattern indicates a temporary pause or consolidation before the trend continues with renewed strength.
The psychology behind the Mat Hold pattern reflects a brief period of consolidation or indecision in the market, where the opposing force attempts to reverse the trend but fails. This pattern demonstrates the prevailing trendâs strength, as the initial pause is overcome by renewed momentum in the trendâs direction, reinforcing tradersâ confidence in its continuation.
According to Thomas N. Bulkowskiâs âEncyclopedia of Candlestick Chartsâ the Mat Hold pattern has a high success rate, with bullish Mat Hold patterns achieving a success rate of approximately 70% in predicting a continuation of the upward trend.
