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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's Three Stars in the South

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Three Stars in the South Candlestick: Summary

The three stars in the south name sounds like a constellation visible from Australia only. But it is a candlestick pattern that acts as a bullish reversal and ranks first, yes, first for reversal performance. That means price reverses more often than any other candlestick I studied. Why? Probably because I found only 9 to study. Thus, anything I say on this web page is likely wrong. But here goes anyway...

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Three Stars in the South Candlestick: Important Results

Theoretical performance: Bullish reversal
Tested performance: Bullish reversal 86% of the time
Frequency rank: 99
Overall performance rank: 103
Best percentage meeting price target: 50% (bear market, up breakout)
Best average move in 10 days: -3.64% (bull market, down breakout)
Best 10-day performance rank: 23 (bull market, down breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal three stars in the south candlestick
Three Stars in the South
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Three Stars in the South Candlestick: Discussion

As I mentioned in the introduction, the statistics are based on just 9 samples. That is just 19,991 fewer than I like to see. The three stars in the south candlestick acts as a bullish reversal both in theory and in practice 86% of the time. That is the best reversal rate that I have seen among the 103 candle types. However, the overall performance rank which measures the move 10 days after the breakout under all market conditions and breakout directions, ranks dead last: 103rd. Thus, expect a reversal, but price to go almost nowhere after that! See the example below if you think I am kidding.

The best average move 10 days after the breakout is a drop of 3.64% in a bull market. That ranks 23rd. I consider moves of 6% or higher to be good ones, so this is almost half of what it should be.

Three Stars in the South Candlestick: Identification Guidelines

CharacteristicDiscussion
Number of candle linesThree.
Price trend leading to the patternDownward.
ConfigurationLook for a tall black candle with a long lower shadow to appear in a downward price trend. The second day should be similar to the first day, but smaller and with a higher low. The last day is a black marubozu that squeezes inside the high-low range of the prior day. Good luck finding one.

Three Stars in the South Candlestick: Example

The three stars in the south candlestick on the daily scale

I know. The picture shown here is far from the idea setup shown above, but with nine candle patterns to choose from, I am not complaining. This three stars in the south candlestick begins with a tall black candle in a downward price trend. It has a long lower shadow. The next day is a smaller version of the prior day only the candle forms a higher low price. That means the lower shadow bottoms above the prior shadow. The last day is a black marubozu, or a four price doji in this example.

The breakout from the three stars in the south candlestick is downward when price closes below the bottom of the candlestick pattern. In this example, the candlestick acts as a continuation pattern. Price entered the candle from the top and exits out the bottom, continuing the downward price trend.

-- Thomas Bulkowski

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Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Computer (n): A device designed to speed and automate errors.