As of 12/20/2024   Indus: 42,840 +498.02 +1.2%     Trans: 15,892 +32.54 +0.2%     Utils: 986 +14.76 +1.5%     Nasdaq: 19,573 +199.83 +1.0%     S&P 500: 5,931 +63.77 +1.1%	YTD  +13.7%   0.0%    +11.9%    +30.4%    +24.3%	Targets    Overview: 12/12/2024     44,200 or 41,750 by 01/01/2025   16,100 or 17,700 by 01/01/2025   1,050 or 975 by 01/01/2025   20,500 or 19,300 by 01/01/2025   6,100 or 5,775 by 01/01/2025
Chart Pattern Indicator: on 12/5/24

As of 12/20/2024   Indus: 42,840 +498.02 +1.2%     Trans: 15,892 +32.54 +0.2%     Utils: 986 +14.76 +1.5%     Nasdaq: 19,573 +199.83 +1.0%     S&P 500: 5,931 +63.77 +1.1%	YTD  +13.7%   0.0%    +11.9%    +30.4%    +24.3%
Targets    Overview: 12/12/2024     44,200 or 41,750 by 01/01/2025   16,100 or 17,700 by 01/01/2025   1,050 or 975 by 01/01/2025   20,500 or 19,300 by 01/01/2025   6,100 or 5,775 by 01/01/2025
Chart Pattern Indicator: on 12/5/24

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...

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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.

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

Three Stars in the South Candlestick: Example

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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See Also

• Tall candles show support and resistance.
• Two candlestick tips could improve profitability.
• Candles near the yearly low perform best.
• Chart pattern breakouts: Which candlesticks appear most often the day before breakouts?
• Shadows. Do tall candle shadows predict price turns? Yes and no.
• Tall candles at peaks and valleys. Tall candles appear at turning points.

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