Admin
April 05, 2020
The Tri-Star is a rare and powerful candlestick pattern that can indicate a trend reversal in either direction, depending on its formation and the context of the surrounding price action. The Tri-Star pattern consists of three candles, and its interpretation depends on whether it forms after an uptrend or a downtrend.
✅ Three Candles: The pattern consists of three consecutive candles:
The first candle is part of the ongoing trend (either Bullish or bearish).
The second candle is typically a Doji or a spinning top, representing a period of indecision or hesitation in the market.
The third candle is opposite in color to the first candle (e.g., if the first candle was Bullish, the third candle is bearish) and closes near the opposite end of the second candle, confirming the reversal.
✅ Location: The Tri-Star pattern often occurs near key support or resistance levels, making it more significant when confirmed by other indicators or chart patterns.
✅ Price Action: The first candle is typically a strong movement in the direction of the prevaipng trend. The second candle is a Doji or spinning top, which shows indecision in the market and a potential shift in momentum. The third candle confirms the reversal, often closing near the opposite side of the second candle and signapng the end of the previous trend.
• Occurs after a downtrend.
• The pattern suggests that buying pressure is starting to take over, and the market may reverse to the upside.
• The first candle is bearish, the second is a Doji (showing indecision), and the third is Bullish, confirming the reversal to an uptrend.
• Occurs after an uptrend.
• The pattern suggests that selpng pressure is taking control, and the market may reverse to the downside.
• The first candle is Bullish, the second is a Doji (indicating indecision), and the third is bearish, confirming the reversal to a downtrend.
• The first candle reflects the strength of the prevaipng trend (Bullish or bearish).
• The second candle, a Doji or spinning top, indicates a pause or indecision in the market. This suggests that neither bulls nor bears are able to dominate the market at this moment, creating a period of hesitation.
• The third candle is where the reversal is confirmed. It indicates that one side (either bulls or bears) has regained control and is pushing the price in the opposite direction of the prior trend.
Entry: After the third candlestick in the pattern, enter a long position when the price confirms the reversal to the upside.
Stop-loss: Set the stop-loss below the low of the third candle, to protect against any false breakouts or continuation of the downtrend.
Target: Look for resistance levels or a predetermined profit target as your exit point.
Bearish Tri-Star (After an Uptrend) 📉:Entry: After the third candlestick in the pattern, enter a short position when the price confirms the reversal to the downside.
Stop-loss: Set the stop-loss above the high of the third candle to protect against any false breakouts or continuation of the uptrend.
Target: Look for support levels or a predetermined profit target as your exit point.
• The Tri-Star pattern is a relatively rare and powerful setup, so it’s crucial to wait for confirmation before entering a trade.
• Always consider other technical indicators (such as RSI, MACD, or moving averages) to validate the reversal signal and increase the reliability of your trade setup.
• Pay attention to the overall market context—such as the broader trend and key levels of support and resistance—before acting on the Tri-Star pattern.
The Tri-Star pattern can be a highly effective tool for identifying potential trend reversals. However, like any candlestick pattern, it is important to consider the broader market context and use additional indicators to confirm the setup. Proper risk management strategies, such as setting stop-loss orders and targeting key support or resistance levels, will help maximize the effectiveness of your trades.