Technical Analysis

Upside Gap Two Crows Explained

Upside Gap Two Crows is a trading term, representing a pattern of the stock price (if the underlying instrument is a stock) denoting a downturn shift in the price.

The upside gap two crows is seen as a bearish pattern, since it potentially signals that the price of the underlying index or security may headed for a downturn as its upward move ends and a downtrend commences.

The reason du jour is that despite two stronger opens (on days 2 and 3) the market positives (the so called bulls) have been unable to maintain upward momentum, thus suggesting that sentiment has now turned from bullish to bearish.

Upside Gap Two Crows is thus a three candlestick bearish reversal pattern. The formation occurs in an uptrend beginning with a long bodied white candle as seen in the image below.

As this is seen as a strong bearish market reversal signal in technical analysis, we’ve categorized it as a “clear signal”.

A walkthrough of Upside Gap Two Crows pattern

Upside Gap Two Crows

The upside gap two crows pattern is a three-day formation while this pattern can be used on other time frames, it’s not seen as a “clear signal” if done so:

Day 1 A bullish day that continues the uptrend where the closing price of the underlying security is well above the opening price.

Day 2 A bearish day where the underlying security gaps higher on the open only to end the day in red, closing well below the opening price.

Day 3 A bearish day where, again, the underlying security gaps up above the opening price of the former trading day and closing below the closing price of that same day while being above the closing price of Day 1.

While the above explanation can be a tad abstract, if you view the image, the pattern look of the upside gap two crows is quite clear. Many trading systems and online brokers has this signal within its trading signal arsenal making it even easier to detect on your security charts.

This has been an explanation of the trading pattern Upside Gap Two Crows.