- Sentiment: Bullish
- No. of candles: 3
- Direction: Reversal
What Is The Bullish Tri-Star Japanese Candlestick Pattern?
The Bullish Tri-Star pattern is a rare bullish reversal pattern that typically forms after a downtrend or during a period of market consolidation.
The Japanese candlestick pattern consists of three candles.
All three candles are Doji candles, which have small bodies and represent indecision in the market.
The first Doji occurs after a downtrend, the second Doji gaps lower from the first one, and the third Doji gaps higher, moving back within the range of the first Doji.
What Is The Psychology Behind The Bullish Tri-Star Pattern?
The Bullish Tri-Star pattern reflects a shift in market sentiment from bearish to bullish.
The appearance of the first Doji after a downtrend signifies indecision and a potential weakening of the bearish momentum.
The second Doji, which gaps lower, suggests that sellers are still trying to push the price down, but the market remains indecisive.
The third Doji, which gaps higher, indicates that buyers are starting to regain control, and a trend reversal may be imminent.
Japanese Candlestick Charting Techniques, Second Edition
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To trade the Bullish Tri-Star pattern, wait for confirmation by a subsequent bullish candle.
The buy trigger occurs when a bullish candle closes above the high of the third Doji, confirming the trend reversal.
Place a stop loss order below the low of the third Doji to protect against potential false breakouts or a sudden reversal.
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
While the Bullish Tri-Star pattern can be a powerful reversal signal, it is important to 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 the occurrence of this pattern is relatively rare, 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.”