Now, we are in the third part of Candlestick Patterns’ Technical Analysis : 7 Strong Bearish Reversal Signals which discuss about eight candlestick patterns which tells us that the stocks market will be reversed from the current up trend (bullish) to down trend (bearish). These Bearish Reversal Signals are very important since can help us to know the best time to sell our stocks/shares so can get the optimum profit or minimum loss. So, beside the Bullish Reversal candlestick patterns, the Bearish candlestick patterns are also a must know to do stocks analysis.
So far, we have discussed three candlestick strong bearish reversal candlestick patterns which are Bearish Dark Cloud, Bearish Abandoned Baby, and Bearish Evening Star. This time, let’s discus the other two which are Bearish Three Black Crows Candlestick Patterns and Bearish Three Inside Down Candlestick Patterns.
Technical Analysis of Bearish Three Black Crows Candlestick Patterns
Bearish Three Black Crows is the three candlesticks pattern which needed three candlestick to form the chart pattern. Bearish Three Black Crows Candlestick Patterns consists of three long solid black candlesticks which happened after a long/significant up trend (bullish). This chart pattern is surely a very strong Bearish/Sell signal. For more understanding, let’s take a look at the picture below:
As we can see, the Bearish Three Black Crows consists of three long candlesticks which happened after a long/significant up trend (bullish). This chart pattern can be happened in various trading time but for sake of simplicity, let’s assume it is happened in daily basis. So, in here, the three candlesticks has create the lower opening and closing price each days which tells us that the sellers is really rule the stocks market during these three days.
Since this happened after a long/significant up trend (bullish), this strong bearish/sell signal also tells us that the stocks market is already too high so traders/investors have strong action to do the long and continuous profit taking. It means the stocks market will be pushed down by the sellers for a long time and significantly. Please note that this Three Black Crows is a strong bearish candlestick patterns so we can surely decide to sell our stocks without the technical analysis confirmations.
However, as usual, I recommend to still wait for the technical analysis confirmations so our decision has more certainty. The confirmations can be from the candlestick itself or from the other Technical Analysis (TA) indicators such as MACD, Accumulative/Distribution, Volume, etc. Since this article is purely about candlestick, let’s also use the candlestick based confirmation as below:
I have added a solid black candlestick and a technical analysis confirmation line in picture above. As we can see, the stocks market is confirmed in down trend (bearish) if in the next trading range, there is a solid black candlestick with lower closing price than the third day closing price. Please be notified that this confirmation black candlestick mustn’t be happened in the next day but can be after a few days. This technical analysis confirmation means that the buyers really have the strong power to push the stocks market down. It is surely a right time to sell our stocks – either to realize our profit or cut our loss.
Technical Analysis of Bearish Three Inside Down Candlestick Patterns
Bearish Three Inside Down is the three candlestick patterns which needed three candlesticks to form the chart pattern. Bearish Three Inside Down Candlestick Patterns consists of a solid white candlestick, a short body black candlestick, and a solid black candlestick. This chart pattern is also called as the confirmed Bearish Bullish Harami. For more understanding about this candlestick patterns, let’s take a look at the picture below:
As we can see from picture above, this Bearish Three Inside Down Candlestick Patterns is surely a Bearish Harami with confirmation. Since there is already a technical analysis confirmation, no wonder if this chart pattern is called as a strong Bearish/Sell Signal. We no need to wait for technical analysis confirmation to decide in here. OK, let’s take a look deeper in this chart pattern for better understanding. This candlestick patterns can be happened in various trading range time but for simplicity, let’s assume it is happened in daily basis.
In first day, there is a long solid white candlestick which tells us that the buyers still continue to rule the stocks market powerfully and it is a sign of continuous up trend (bullish) if nothing happened in the next day. Unfortunately, the something is happened. There is a short body black candlestick in the second day. This black candlestick has lower opening price than the first day closing price and higher closing price than the first day opening price.
This second day candlestick tells us that the sellers start to gain their power which shown by the significant lower opening price than the first day opening price and the black body. However, the sellers power is not significant yet which shown by the short black body and the higher closing price than the first day opening price. It can be said the stocks market is still indecisive condition even though there is already the bearish/sell signal in this second day.
In the third day, there is a solid long black candlestick with lower closing price than the first day opening price which tells us that the sellers power is confirmed significant enough to push the stocks market down. The third day candlestick has confirmed that the stocks market is in down trend (bearish) and it is the time to sell our stocks. However, for more certainty, I suggest to wait for other technical analysis confirmations.
The confirmation can be from the candlestick itself or from other Technical Analysis (TA) Indicators such as Moving Average, Stochastic, Bollinger Band, etc. For this article, let’s utilize the candlestick based confirmation as below:
I have added a black candlestick and a technical analysis confirmation line in picture above. As we can see, the stocks market is confirmed in down trend (bearish) if in the next day range, there is a solid black candlestick with lower closing price than the third day closing price. Please be noted that this technical analysis confirmation can be happened in various trading range time so mustn’t in the next day. This technical analysis confirmation tells us that the sellers power is really strong so the candlestick patterns have double bearish/sell confirmation.
So in here. The technical analysis of Bearish Three Inside Down Candlestick Patterns tell us that it is the right time to sell our stocks. It is because the stocks market is in bearish (downtrend).
Having a profitable stocks trading everyone!