What it is
The Upside Gap Two Crows is a three-candle bearish reversal pattern similar to the Two Crows but more specific. After a long bullish candle, two small bearish candles appear that both gap above Candle 1's close — the second crow engulfs the first, but both remain above the gap.
The key difference from regular Two Crows is that both bearish candles maintain the upside gap — they don't close back into Candle 1's body. Despite this, the two bearish candles within the gap signal distribution and an impending reversal. The 'crows' are perched above but looking down.
The psychology
Upside Gap Two Crows show distribution occurring within a bullish gap. Candle 1 is a strong bullish candle. The uptrend is running. Then a gap up occurs — Candle 2 opens above Candle 1's close.
But Candle 2 is bearish despite the gap up. Sellers push price lower during the session, though it still closes above Candle 1's high. This is the first warning — a bearish candle in bullish territory.
Candle 3 opens above Candle 2's open and closes below Candle 2's close — engulfing the first crow while still remaining in the gap. Two consecutive bearish sessions above the market suggest smart money is distributing into the gap. The bullish gap that should have been a continuation signal is being used as an exit opportunity.
Identification
- 01Prior uptrend — Must appear after a rise
- 02Candle 1 — Long bullish candle
- 03Candle 2 — Small bearish candle that gaps above Candle 1's close
- 04Candle 3 — Bearish candle that engulfs Candle 2's body but stays above the gap
- 05Gap maintained — Both crows remain above Candle 1's close
- 01Both crows have upper shadows — Rejection at higher prices
- 02High volume on Candle 3 — More selling than Candle 2
- 03At major resistance — Adds confluence
- 04Candle 3 nearly closes the gap — Gap about to be filled
- 01No gap above Candle 1 — Gap is essential to the pattern
- 02Crows close into Candle 1's body — That's regular Two Crows
- 03Candle 3 doesn't engulf Candle 2 — Engulfing within the gap is required
- 04No prior uptrend — Needs bullish context
Execution framework
Conservative: Enter short when price closes below Day 1's close, filling the gap.
Aggressive: Enter short on a break below Day 3's low.
Above the high of the pattern (the highest point among the gap and crow candles). If price pushes to new highs, the bearish signal is invalidated.
T1: Close of the first (large bullish) candle. T2: Previous swing low. The unfilled gap with two bearish candles shows strong distribution - expect follow-through if confirmed.
Minimum 1:2. Wait for a bearish confirmation candle before entering to improve reliability.
Context matters
The Upside Gap Two Crows is rarer than standard Two Crows because both bearish candles must remain within the upside gap. It signals distribution — sellers are using the gap as an exit, which typically leads to a gap fill and then continuation downward.
- 01At major resistance or all-time highs
- 02After an extended parabolic rally
- 03Both crows show increasing selling pressure
- 04On daily charts where the gap is meaningful
- 05Bearish divergence already present
- 06High volume on the crows
- 01In a strong uptrend where gaps are normal momentum
- 02If the crows are very small
- 03On low timeframes
- 04Low volume on the crows
- 05If Candle 3 is smaller than Candle 2 (no engulfing)
- 06Against dominant higher-timeframe uptrend
Similar to two crows but with a gap that doesn't fill. Even more bearish due to the unfilled gap.
Compare the full pattern set
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