As of 09/18/2020
  Indus: 27,657 -244.56 -0.9%  
  Trans: 11,432 -120.44 -1.0%  
  Utils: 798 -12.86 -1.6%  
  Nasdaq: 10,793 -117.00 -1.1%  
  S&P 500: 3,319 -37.54 -1.1%  
YTD
-3.1%  
 +4.9%  
-9.2%  
 +20.3%  
 +2.7%  
  Targets    Overview: 09/14/2020  
  Up arrow29,400 or 26,700 by 10/01/2020
  Up arrow11,750 or 10,600 by 10/01/2020
  Up arrow845 or 775 by 10/01/2020
  Up arrow11,800 or 10,400 by 10/01/2020
  Up arrow3,600 or 3,200 by 10/01/2020
CPI (updated daily): Arrows on 8/18/20
As of 09/18/2020
  Indus: 27,657 -244.56 -0.9%  
  Trans: 11,432 -120.44 -1.0%  
  Utils: 798 -12.86 -1.6%  
  Nasdaq: 10,793 -117.00 -1.1%  
  S&P 500: 3,319 -37.54 -1.1%  
YTD
-3.1%  
 +4.9%  
-9.2%  
 +20.3%  
 +2.7%  
  Targets    Overview: 09/14/2020  
  Up arrow29,400 or 26,700 by 10/01/2020
  Up arrow11,750 or 10,600 by 10/01/2020
  Up arrow845 or 775 by 10/01/2020
  Up arrow11,800 or 10,400 by 10/01/2020
  Up arrow3,600 or 3,200 by 10/01/2020
CPI (updated daily): Arrows on 8/18/20

Bulkowski on the Three Stars in the South Candle Pattern

 

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...

$ $ $

My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

$ $ $

Important Results
Discussion
Identification Guidelines
Example
See Also

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

Top of page More

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

Top of page More

See Also

 

Support this site! Clicking any of the books (below) takes you to Amazon.com. If you buy ANYTHING while there, they pay for the referral.

My novels:  Bumper's Story Head's Law

Chart Patterns: After the Buy Getting Started in Chart Patterns, Second Edition Trading Basics Fundamental Analysis and Position Trading Swing and Day Trading Visual Guide to Chart Patterns Encyclopedia of Candlestick Charts Encyclopedia of Chart Patterns 2nd Edition Trading Classic Chart Patterns

Copyright © 2005-2020 by Thomas N. Bulkowski. All rights reserved.
Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.
Some pattern names are registered trademarks of their respective owners.

Home Advertise Contact Donate Links Privacy/Disclaimer

Computer (n): A device designed to speed and automate errors.Smiley