The simple and most realistic way to interpret this pattern is that the bears are losing momentum in the market. This is determined because the candles are getting smaller and they should be accompanied by lessoning volume in that given direction. After the third candle, you can begin to look for a bullish candle that will help to confirm if there is reversal of trend. What you can do it bring volume into the equation as well as other indicators to help give you an idea of the direction of the market. Finding this pattern can be simple is you are looking for swing points, but implementing it could be a little more difficult. Again, all patterns should be use as an alert to a market shift and your own analysis should be applied to help confirm your opinion on the market.
Three-Stars-In-The-South
 | By Nathan Young | Macroaxis Story |
Judging by the title, I’m sure you can guess that the three stars in the south candlestick pattern recognizes three candles. This particular pattern represents a bullish reversal, meaning the market should be in a downtrend when looking for this pattern. Patterns are not one hundred percent accurate but are a wonderful way to become alerted to potential shifts in the market.
Updated over a year ago View currently updated edicational stories | Filter Three Stars In The South |
Reviewed by Raphi Shpitalnik
Let us go deeper and discuss how this pattern forms. We’ve already established the market needs to be in a bearish pattern. Then, the first candle we need to identify is a bearish candle that is long in body with a small lower wick. Moving to the second candle, we can look for a candle that has a smaller body and wicks on both ends. The third and final candle should be a small-bodied candle that has no wicks and is within the body of the previous candle.
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