- Sentiment: Bearish
- No. of candles: 3
- Direction: Reversal
What Is The Bearish Tri-Star Japanese Candlestick Pattern?
The Bearish Tri-Star pattern is a rare bearish reversal pattern that consists of three Doji candles.
The Japanese candlestick pattern occurs after a prolonged uptrend, and the three Doji candles are sandwiched between two long white (bullish) candles.
What Is The Psychology Behind The Bearish Tri-Star Pattern?
The Bearish Tri-Star pattern reflects a potential shift in market sentiment from bullish to bearish.
During the period of the first white candle, buyers are in control and push the price higher.
However, during the period of the first Doji candle, the buying pressure wanes, and the price closes near its opening level, indicating indecision in the market.
The second Doji candle opens and closes at or near the same level as the first Doji candle, suggesting that market participants are unable to establish a new direction.
The third Doji candle opens and closes at or near the same level as the second Doji candle, indicating a lack of buying interest and a possible loss of momentum for the bulls.
The two long white candles that precede the Doji candles suggest that the bullish momentum has exhausted itself, and the bears may take control of the market.
Japanese Candlestick Charting Techniques, Second Edition
71% OffHow To Trade The Bearish Tri-Star Reversal Pattern?
To trade the Bearish Tri-Star pattern, wait for confirmation by a subsequent bearish candle or another technical indicator.
The sell trigger occurs when the price moves and closes below the low of the third Doji candle, confirming the pattern.
Place a stop loss order above the high of the second Doji candle to protect against potential false breakouts or reversals.
As the price moves in your favor, consider using trailing stops or other risk management techniques to lock in profits and minimize potential losses.
Additional Tips
The Bearish Tri-Star pattern is a rare pattern, and traders should use it in conjunction with other technical indicators and chart patterns to confirm the trend change.
Additionally, be aware of the overall market context and consider factors such as support and resistance levels, as well as the strength of the prevailing trend.
Keep in mind that no single pattern can guarantee a trend reversal, and proper risk management is always necessary.
Continue to learn about Japanese candlesticks through books, such as Steve Nison’s “Japanese Candlestick Charting Techniques” and “Beyond Candlesticks.”