Upside Gap Two Crows | RizeTrade

What is the Upside Gap Two Crows Candlestick Pattern?

The Upside Gap Two Crows is a bearish reversal candlestick pattern that forms during an uptrend. It consists of three candles and signals a potential shift from bullish to bearish sentiment.

This pattern reveals a loss of momentum among buyers and a potential takeover by sellers.

Pattern Structure:

1. First Candle: A long bullish (green) candle continuing the uptrend.

2. Second Candle: A smaller bearish (red) candle that gaps up above the first candle’s close (no overlap).

3. Third Candle: Another bearish candle that opens within the second candle’s body and closes within the gap between the first and second candle.

The “two crows” refer to the two bearish candles that follow the initial bullish candle — symbolizing the arrival of bearish control.

🔑 Key Takeaways

 🐦 The Upside Gap Two Crows is a three-candle bearish reversal pattern that forms after an uptrend.
 📉 Indicates fading buyer momentum and rising selling pressure.
 🕯️ Confirmation appears when the third candle closes within the gap created by the first two candles.
 📊 Most effective near resistance levels or in overbought market conditions.
 🎯 Traders should wait for bearish confirmation before initiating short positions.

🔍 How Reliable Is the Upside Gap Two Crows Pattern?

Many traders spot the Upside Gap Two Crows as an early sign of trend exhaustion — but how often does it actually signal a real reversal?

🧪 Our Testing Process

Statement:
We conducted an internal backtest to measure the reversal accuracy of the Upside Gap Two Crows pattern across key markets and timeframes.

Evidence:

• 987 total instances tested

• Markets: major stocks and Forex pairs

• Timeframes: 1H, 4H, Daily, Weekly

• Evaluated for reversal probability and short-term performance

Insight:
This pattern was relatively rare but consistent enough to produce measurable bearish reversals, especially on higher timeframes where noise was reduced.

📈 Backtest Results

Statement:
We tested the pattern both alone and with added confirmation conditions to see how reliability changed.

Evidence:

Insight:
👉 The confirmation setup—either a bearish follow-through candle closing below the first candle’s midpoint or a momentum shift via RSI or MACD—raised accuracy by 6–8 percentage points.
This suggests traders may benefit from pairing the pattern with momentum confirmation before entering short positions and analyzing their historical performance to gauge consistency across assets.

🕯️ How to Trade the Bearish Upside Gap Two Crows Pattern?

The Upside Gap Two Crows is a bearish reversal pattern that appears after an uptrend, signaling weakening buying pressure and a potential shift toward selling momentum.

🔍 Entry

Identify the three-candle setup clearly:

1. A strong bullish candle continuing the uptrend.

2. A bearish candle that gaps up above the first close.

3. A third candle that opens within the second and closes inside the gap between the first two candles.

Wait for confirmation — typically a bearish candle closing below the first candle’s close or the third candle’s low.
Enter a short position once this confirmation appears, validating the reversal.

🛡️ Stop-Loss

Place your stop above the high of the second candle, which marks the upper boundary of the pattern.
This level represents the final bullish attempt before momentum shifted, keeping risk well-defined.

🎯 Target

For conservative targets, aim for the nearest support zone or prior swing low.
Aggressive traders may use Fibonacci retracements (0.618) or a 2:1 reward-to-risk ratio to capture deeper reversals.
Consider scaling out partial profits if price hesitates or retraces temporarily before continuing lower.

Trading Strategies that Use the Upside Gap Two Crows Candlestick Pattern

Upside Gap Two Crows + RSI Overbought Strategy

Concept
This strategy combines the Upside Gap Two Crows pattern with RSI overbought confirmation to validate potential bearish reversals at resistance.

Setup
Identify the Upside Gap Two Crows forming near a resistance zone.
Check RSI — if it’s above 70, the probability of a reversal increases.
Wait for a bearish confirmation candle closing below the pattern before entering.

Entry & Exit
Enter short once the confirmation candle closes lower.
Place the stop-loss above the pattern’s high and target the nearest support level.

What Gives It an Edge
Combining price action reversal with momentum exhaustion (via RSI) filters out weak setups and emphasizes high-probability turning points.

Upside Gap Two Crows + Moving Average Reversal Strategy

Concept
This setup pairs the candlestick pattern with a trend filter — the 50-period EMA — to confirm broader reversals after strong uptrends.

Setup
Apply a 50-period EMA to the chart.
Look for the Upside Gap Two Crows forming above the EMA during an active uptrend.
Wait for price to close below the EMA after the pattern — a key sign of momentum shift.

Entry & Exit
Enter short on the close below the EMA.
Place a stop-loss above the recent high and target the next support zone.

What Gives It an Edge
This approach validates bearish momentum by confirming both candlestick reversal and trend breakdown, reducing premature entries.

Real Trading Example: Upside Gap Two Crows on Tesla (TSLA)

Tesla stock was in a clear uptrend near $255:

• Day 1: Strong bullish candle closed at $255.

• Day 2: Small bearish candle gapped up to $258, closing slightly lower at $257.

• Day 3: Another bearish candle opened at $256.50 and closed at $254, partially filling the gap.

This sequence completed the Upside Gap Two Crows pattern, signaling weakening bullish momentum.
A trader entered short at $253.80 after a confirmation candle closed lower, with a stop-loss at $258.20 and target at $245 (previous support).
Price declined to $246 within days — a 2:1 reward-to-risk setup confirming the bearish reversal.

Best Indicators to Combine with the Upside Gap Two Crows Pattern

Common Mistakes and How to Avoid Them

Recognizing Failure Signals

• Entering before a confirmation candle closes often leads to false signals.

• Ignoring the overall market trend can result in poor timing — avoid shorting during strong macro uptrends.

• Misidentifying similar three-candle formations like the Evening Star can reduce accuracy.

Tips for Trading the Upside Gap Two Crows

• Focus on setups forming near resistance zones for higher probability.

• Combine the pattern with momentum indicators such as RSI or MACD for added confirmation.

• Avoid trading it in low-volume or sideways markets, where gaps tend to be unreliable.

🌒 Upside Gap Two Crows vs. Evening Star Pattern

Both Upside Gap Two Crows and Evening Star are classic bearish reversal patterns, but they differ in how momentum shifts from bullish to bearish.

🔍 Core Difference

Statement:
While each involves a three-candle formation signaling exhaustion of an uptrend, their structure and confirmation criteria set them apart.

Evidence:

Insight:
The Upside Gap Two Crows serves as an initial alert that bullish momentum is weakening, while the Evening Star confirms a decisive shift to selling pressure once price closes below the midpoint of the first candle.
In practice, traders often look for volume confirmation or additional bearish signals to validate either setup before entering short positions.

To measure how these reversal patterns perform in real setups, traders can analyze their historical trade data and compare outcomes across different market phases.