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Downside Gap Two Crows Pattern

Learn the bearish reversal Downside Gap Two Crows pattern: identification, trading strategies, and common mistakes.

Mark · Trader & Founder, Social Forex

Downside Gap Two Crows Pattern

Definition

The Downside Gap Two Crows is a bearish reversal candlestick pattern consisting of three candles that appears after an uptrend. The first candle is a long bullish candle, the second is a small bearish candle that gaps up above the first candle's close and closes near its low, and the third is a bearish candle that opens above the second candle's close but closes below it, filling the gap. This pattern indicates weakening buying pressure and growing selling pressure.

How to Identify

  • Candle 1: A long bullish candle with little or no wick.
  • Candle 2: A small bearish candle that opens above the close of Candle 1 (gap up), closes near its low but above the close of Candle 1.
  • Candle 3: A small bearish candle that opens above the close of Candle 2, closes below the close of Candle 2, and fills the gap between Candle 2 and Candle 1.

    • Diagram illustration:

    Price Action — reading candlestick patterns in context

    How to Trade

  • Entry: After Candle 3 closes, enter a sell order. Alternatively, wait for a retest of the Candle 3 high.
  • Stop Loss: Place above the high of Candle 2 (or above Candle 3's high for a tighter stop).
  • Target: Measure the height from Candle 1's high to Candle 3's low, project it downward. Or target key support levels.
  • Confirmation: Use RSI divergence, increasing volume on bearish candles, or a strong bearish Candle 3.

    • Real Example

    Assume EUR/USD rallies; Candle 1 is a 100-pip bull candle, Candle 2 gaps to 1.1050 and closes at 1.1030, Candle 3 opens at 1.1040 and closes at 1.1020. A trader sells at 1.1020, stop loss 1.1055, target 1.0950.

    Common Mistakes

  • Confusing with Evening Star: Evening Star has no gap up between first two candles; Downside Gap Two Crows requires a gap.
  • Trading before Candle 3 closes: The pattern is only valid after closure; early entries risk reversal.
  • Ignoring trend: In sideways or downtrend, the pattern is less reliable.
  • Using a too-tight stop loss: Small price swings can stop out the trade prematurely.
    • Price Action — reading candlestick patterns in context

    Content is for reference only, not investment advice. Forex trading carries high risk.

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