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Bearish Upside Gap Two Crows Candlestick Pattern
The Bearish Upside Gap Two Crows is a reversal candlestick pattern that occurs after a significant uptrend and signals a possible bearish reversal. It is characterized by three candles: two upward candles followed by a larger downward candle. This pattern is indicative of a potential shift from bullish to bearish sentiment in the market.
Pattern Formation:
- First Candle: The pattern begins with an upward candle, continuing the existing bullish trend.
- Second Candle: Another upward candle follows, which opens with a gap above the high of the first candle, indicating strong buying interest.
- Third Candle: Contrary to the initial bullish sentiment, the third candle is a downward one. It opens higher than the second candle's open but closes below it, yet above the close of the first candle. This suggests that the buyers are losing control and the sellers are stepping in.
In the context of the Bearish Upside Gap Two Crows function:
- The pattern requires an uptrend, which is confirmed by the first up candle.
- The second candle also moves upwards and opens with a gap above the first candle’s high, continuing the bullish momentum.
- The third candle is where the reversal is signaled. It’s a down candle that opens above the second candle's open but closes below it, indicating a shift in sentiment from bullish to bearish. However, it still closes above the first candle’s close, leaving a level of uncertainty.
Traders should consider this pattern as a warning of a potential trend reversal and may look to confirm this with additional technical or fundamental analysis. The presence of the Bearish Upside Gap Two Crows can be used as a signal to potentially exit long positions or prepare for possible short opportunities, with further confirmation.