Definition
Bullish Three Star in the South consist of three consecutive black candles. The candles have shrinking bodies which signals the appearance of buyers on the market. Each candle closes below the previous day. The formation reflects a slowly changing market behaviour.
- Trend: Reversal
- Expected trend: Bullish
- Previous trend: Bearish
- Reliability: Moderate
- Type: Bullish
- Number: 3
Recognition
- The market is in a downward trend.
- The first day is a long Bearish Marubozu Opening with long lower shadow.
- The second day is also a Bearish Marubozu Opening, but its smaller in size than the previous candle.
- The second day is a Bearish Marubozu Black, moving in the second candle’s trading range.
Interpretation
There are three consecutive black candles in the falling trend. The strength of the trend decreases each day, due to the increased number of share purchases (the share price cannot drop below the first day’s minimum value). At this point, investors are recommended to start closing their short positions and open long positions. Nobody should act on the signal without a confirmation.
Important factors
To make sure the trend is reversed, a confirmation on the fourth day is needed. The confirmation could come from a white candle with an upward gap or a higher closing price.
