How much lower is the third close than the first?
Reveal the worked answer
4.30.
Calculate from the supplied OHLC, then distinguish geometry from the uncertain future.
Technical Analysis · TA-02g · Core
Three black crows
How do you recognize three black crows without treating it as an automatic entry?
What you will learn and prerequisites
- Read the exact candle geometry.
- Identify prior context.
- State a confirming and an invalidating branch.
Read first: Market structure comes first, Candlestick anatomy and the ten-pattern path
Three black crows describes three bearish bodies with lower closes. Repeated follow-through can indicate deteriorating support, but the same sequence after an already extreme decline may be late rather than a fresh opportunity.
Put location before the name
The fictional setup occurs after a weakening advance or failed upper-range extension. That reference must be known before identifying the signal; otherwise a trader can invent convenient support or resistance afterward. Match the pattern's timeframe with the context timeframe and state when the bars finish.
The illustration is an original teaching sequence, not an alert, backtest or historical probability. The user's candle panel supplies the syllabus, not a specification for automated trading thresholds.
Read the geometry
The closes are 101.50, 99 and 97.20. Each later open is within the preceding body in this example. First-to-third closing decline is 4.30. The price sequence does not mean buyers disappeared: every completed trade still has both sides.
Walk both next-bar branches
A confirming branch for this particular process is a corrective recovery that fails beneath newly formed lower highs. An invalidating branch is a sharp reclaim above 102 that erases much of the sequence. Write both before watching the next interval. Confirmation is additional evidence, not certainty; failure means the original premise needs reassessment.
Even a visually confirmed pattern can offer poor execution economics. Check the next obstacle, spread, available liquidity and consequence of a failed entry. A bullish candle does not automatically justify buying an expensive call, and a bearish one does not justify uncovered short calls.
Read the completed bars
Use these exact data: bar 1: open 104.00, high 104.30, low 101.00, close 101.50; bar 2: open 102.00, high 102.20, low 98.50, close 99.00; bar 3: open 99.70, high 100.00, low 96.80, close 97.20. Begin with open and close, then inspect the shadows. Compare completed intervals; do not assume a particular high–low order within one interval.
The closes are 101.50, 99 and 97.20. Each later open is within the preceding body in this example. First-to-third closing decline is 4.30. The price sequence does not mean buyers disappeared: every completed trade still has both sides.
Now rehearse the favorable and adverse branches above. Explain what would change your confidence without changing the already-completed candle. The chart and popup use this same OHLC sequence, so the lesson can be reproduced numerically rather than memorized from a decorative drawing.
Open the calculation without leaving this lesson
Three black crows—fictional completed intervals
Vertical: USD per share
Horizontal: Completed interval
Hollow body: close at or above open. Filled body: close below open. Neither color is a trade instruction.
Read the graph as a data table
| Interval | Open | High | Low | Close |
|---|---|---|---|---|
| 1 | 104 | 104.3 | 101 | 101.5 |
| 2 | 102 | 102.2 | 98.5 | 99 |
| 3 | 99.7 | 100 | 96.8 | 97.2 |
The named shape is not a guarantee
The adverse branch is a sharp reclaim above 102 that erases much of the sequence. Maintaining the original label does not restore the premise. A similar-looking candle in the middle of overlapping range trade may have much less useful context.
Another failure is hindsight selection: locating only successful examples after seeing their outcomes. A usable process needs stated definitions, transaction costs and out-of-sample evaluation before any claimed edge.
Check your understanding
Try the question before revealing its answer. These are reading checks, not trading certification or a site completion record.
Does this pattern establish a profitable options entry?
Reveal the worked answer
No.
Instrument price, time, liquidity and the loss scenario must also be evaluated.
Recognize the three black crows, locate it, and explain both confirmation and failure before discussing a trade.
Sources, assumptions and downloadable script
External references support definitions and conventions. Worked scenarios and prose are original. No current quotes or dealer inventory are claimed.
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