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3 black crows pattern containing 2 runaway gaps on weekly Nasdaq chart.

As of Aug 31, $COMPQ weekly chart is displaying a 3 black crow pattern containing two runaway gaps. I've never seen interpretations of either of these two patterns using weekly time frames - only daily - and never when one is part of the other. It definitely looks sinister. How much more significant are these as weekly patterns, and for occurring simultaneously?

Anyone know?
Thanks.

Best Answers

  • markdmarkd mod
    edited September 1 Answer ✓
    Nobody "knows". But in this instance the pattern occurs well into an already strong down trend. So, while it may indicate the up leg in the current bear trend is done (and that's not for sure), it can't be a trend reversal, because it's a bearish pattern in a bear trend. Also, volume is light. That indicates a lack of buyers rather than strong selling. So, the up leg brought prices up high enough that new buyers got scared off. The lack of price progress in an up leg in a down trend brought in sellers - but not newly converted bears with big positions to unload - just shorter term traders taking profits, maybe with some early bulls panicking out.

    So the trend remains down until proven otherwise. On the daily chart, there is a possible first bull up leg under construction - the higher high in August versus the last lower high in June. The higher high didn't clearly break the down trend line from the November high, so it's not too positive. If it is the start of a bull leg, the June low has to hold and the the next leg up has to break the August high. But, back to the weekly chart, something similar happened in March - a high above a previous lower high, but then it sold off, also on unimpressive volume and made new lows. The more bullish difference at the June low was a narrow range doji on high volume that showed buyers were absorbing the selling, indicating, at least at the time, that at least some big money thought this was a value area. We'll see if that sentiment prevails if prices get back there.
  • proconsulproconsul
    Answer ✓
    Thank you for those insightful (and helpful) comments. Much appreciated!
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