Trade Plan: 3 Crows in the Corn Field Have you ever been trading and you begin to see the market start to move against you in a creeping fashion? The market is quiet and you see a small candlestick pass against you. It is a small amount of Pips though, but then a second comes and then a third. All moving against you. Oh dear, the market is creeping against you. In reality, the market is coiling up to make a move and you are on the wrong side. This pattern is traditionally called “3 crows in a corn field (or black crows)” – for the bearish case. For the bullish case, it is called – “3 white soldiers.” It is an old, but tried and true chart pattern – black and white were back in the days when charts did not have color. If you are in the wrong side of the trade, one had better get out. Better yet, on can use this as a good “price pattern” Trade Plan as described in this Blog post and shown in the graphic below.
Description: This price pattern Trade Plan is looking for three consecutive bearish uniform candlesticks that are much smaller (< 50%) than the recent candlesticks (for example the last 10). These candlesticks should have small wicks and the last candlestick should close below the 50% mark. In this Trade Plan we shall be discussing the bearish case, but the opposite would be true for the bullish case.
Trigger: Entry on the completion of the third candlestick of the pattern.
Target: The Target should be at least 2 times the stop, or even more, as when these patterns work they generally yield a lot of Pips.
Stop: At the high of the first of the three identified candlesticks.
Order Management: A simple market order can be used to enter at the completion of the third candle with a minimum PSR (Profit Stop Ratio) of 2 to 1 should be used.
Filter: Always trade in the direction of the 20MA, and also trade at a recent reversal (last 5 to 20 bars) of the 20MA moving from bullish to a bearish stance. You may also avoid this pattern during quite market times and news events.
One could consider doing this Trade Plan on 15-minute, 1-hour or 4-hour times series charts for the best results. Give this Trade Plan a look and see if you can make it work and/or improve upon it. Please see below for a video presentation of the Trade Plan.
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