A three-candle bearish reversal pattern that appears after an uptrend, signaling weakening buying pressure.
Mark · Trader & Founder, Social Forex
Definition
Upside Gap Two Crows is a three-candle bearish reversal pattern:
Candle 1: A long bullish (green) candle, showing strong upward momentum.
Candle 2: A bearish (red) candle that gaps up above candle 1's high, but closes lower (small red body).
Candle 3: A second bearish candle that opens higher than candle 2 (usually a small gap), but closes lower than candle 2 (may penetrate into candle 1's body).
Diagram illustration:
How to Identify
Appears in an uptrend or near resistance.
Candle 1 has a large body, small or no wicks.
Candle 2 opens above candle 1's high (gap up) and closes lower, forming a small red body.
Candle 3 opens higher than candle 2 (often a small gap relative to candle 2) and closes lower than candle 2 (may close below candle 2's open).
Both candle 2 and 3 are red (bearish).
The pattern is stronger if candle 3 closes below candle 2's open or penetrates candle 1's body.
How to Trade
Confirmation: Wait for a fourth bearish candle (confirmation) or a break below the pattern's low.
Entry: Sell stop below the low of candle 1 (or below the low of candle 3).
Stop Loss: Above the high of candle 3 or above candle 2's open (if the gap remains).
Target: Nearest support or pre-trend retracement (e.g., 100% retracement of candle 1).
Real Example
Suppose EUR/USD is rising. Day 1: long bullish candle from 1.1000 to 1.1100. Day 2: gap open at 1.1120, close at 1.1090 (red candle). Day 3: gap open at 1.1105, close at 1.1070 (penetrates candle 1's body). This signals a decline. Trader sells below 1.1070, stop above 1.1125, target 1.1000.
Common Mistakes
Entering without confirmation: Jumping in immediately after the third candle, risking a false signal if price continues up.
Confusing with Three Black Crows: Three Black Crows has three consecutive bearish candles with no gaps; Upside Gap Two Crows includes gaps.
Ignoring context: If the pattern appears in a downtrend, it is weaker or may be a false signal.
Content is for reference only, not investment advice. Forex trading carries high risk.
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