Upside Gap Two Crows

Upside Gap Two Crows is a bearish Japanese candlestick reversal pattern explained in a book authored by Steve Nisson. There is a strong bullish candlestick in the uptrend followed by a gap-up opening. The trend is up and the price pattern is bullish.

The bulls could not sustain the momentum in the current session and the price closes lower. It turns out to be a bearish candlestick. Body of this candle is relatively smaller but it is higher than the body of the previous bullish candlestick. Hence, it is a Bearish Star pattern with second candle that has a bearish body.

In the next session, price gaps up above the previous session. So now, the bulls are back in action after a pause in the second candle. There is an opportunity for bulls to trade a bullish continuation pattern.

But the price closes lower in this session as well and it turns out to be a bearish candlestick. The bearish body of this third candle engulfs the body of the middle bearish candlestick. This formation is known as Upside Gap Two Crows pattern.

It shows that the bulls failed to take the prices further even after attempting it. The continuation pattern bulls are stuck in the trade. There is a possibility of a trend reversal.

If price goes and closes above this high of the third candle, then it will be a failure of this bearish pattern and it will trigger a bullish continuation candlestick pattern known as a Mat-hold pattern.

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This pattern can be plotted on the chart by adding it from the Add study menu in TradePoint & Patterns in RZone. The pattern is also available in the System Builder section. By combining this pattern with other patterns and indicators, you can create your own trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.