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Bearish Candlestick Patterns
Three day bearish patterns
Bearish Sanpei (three crows)
Reliability Rating: high
This pattern is intented to singal either a trend reversal or the trend continuation. It consists of three black candlesticks of similar increments and size. It signifies a continuation of the trend.
If the second day gap is lower followed by a third candlestick which opens above the midrange of the second day, this is also considered bearish. (also known as a "down gap three wings").
In the last variation, each black candlestick opens at the close of the previous day. This pattern is extremely bearish and suggests a strong down trend.
Red three candlestick advance block or Skizumari
Reliability Rating: low
If the second and third day show decreasing higher high's following a long white marubozu, the trend is reaching it's end and signifies a sell. This sell pattern is also known as a red three candlestick advance block or skizumari, this indicates uncertainty and it would be advised to assume the trend will break.
Three River Evening Doji Star
Reliability Rating: High
This pattern start with a long white candle (part of a uptrend), it is followed by a gap up doji and finally on the third day a black candle is formed with a gap down.
The uptrend builds stength and gaps on on the second day of this pattern. On the second day, there is a small trading range showing an erosion of the uptrend. Finally on the third day, it gaps down and forms a black candle. It is the third day that gives the confirmation that the trend has reversed.
Reliability Rating: Moderate
Sansen / Three Rivers / The Three River Evening Star
The sansen is a three day pattern. The first day consists of a long white candle, followed by a small gapped white candle and ends with a long black candle. This pattern is considered a bearish reversal.
Other variations of the sansen are
Complex Bearish patterns
Bearish Sanpo (falling three methods)
Reliability Rating: high
The idea behind the sanpo pattern is that no price movement moves straight up or down, there always exists some retracement before the movement makes a new high or low. Therefore this pattern is to indicate whether a trader should "pause" during the trend (a short term consolidation will occur with a direction opposite to that of the major trend).
Bearish Formation (falling three methods)
Bearish Breakaway
Reliability Rating: Moderate
This is a multiple day pattern. It starts with an established uptrend. On the second day the stock gaps up with a smaller white candles. On day 3 and 4 the candles are small but closing upward. On the last day of the pattern a large black candle is formed.
In this pattern, day 4 in not necessary, an equally valid pattern is where days 1,2,3, and 5 occur.
This only shows the potential for a short term breakout and does not give indication about the strength of the breakout.
Sanzan or Three Mountains
Reliability Rating: moderate
Similar to a triple top formation, the Sanzan (or three mountains) have three peaks of all similar height.
Buddha top formation
Reliability Rating: moderate/high
The buddha top is similar to the sanzan except that the middle mountain is highter than the other two (head and shoulders pattern).
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