Two Crows refer to the Bearish reversal models. Crows in the model represented by two black candles (downward candles). These two candles look like two crows flying from the tree branch. In Japanese Candlestick Theory Crows resembles Bearish (or descending) mood of the traders.
In the ideal case of the Two Crows, the Open price of the second black(downing) candle is higher than the Open price of the first one. In its turn, the Close price of the second candle is lower than the Close price of the first. Two Crows are considered “flying” when there is a gap between the body of the first black candle and Close price of the preceding candle; Two Flying Crows have more power.
Assume that’s there is an upward tendency on the market. Despite the fact, that next candle opens with the gap, new heights cannot be kept during the whole day, so there is a black (downing) candle forming. Nevertheless, there still hope for the remaining upward tendency, the Close price of the candle are still higher than the Close price of the previous candle. Next candle shows even more Bearish sentiment: new High followed by falling prices until the close of the session. The most negative sign is that Closing price of the last bar even lower than the closing price of its ancestor. If the trend were strong new maximums could be able to consolidate. Such behavior often scares Bullish traders. If the next candle will not restore upward tendency – it is strong sign to close long positions.
There is another model with similar to Two Crows structure. Unlike the first pattern, this figure represents Bullish signal during Upward Trend. This model is one of the continuation patterns. The name of this model is Matt-Hold pattern.
The structure of the model is the same as Two Crows. The model can have two, three or even four black candles in a row, the next candle is the long white candle, which signals about the continuation of the trend. The white candle can have a gap between it Open price and Close price of the previous black candle, in this case, model are considered more potent.
In a nutshell, Matt-Hold model appears when the market fails to form Two Crows pattern, and the trend continues.