BEARISH TRI STAR
Definition
This pattern consists of three consecutive Doji candlesticks. The occurrence of such a pattern is extremely rare, making it highly noteworthy when it does appear.
Recognition Criteria
1. The market is currently defined by a dominant upward trend.
2. Three consecutive Doji are seen.
3. The second day gaps above the first and the third.
Pattern Requirements and Flexibility
The Bearish Three Star consists of three consecutive Doji, in which the second Doji gaps above the two other Doji. It is sufficient that the gap is a body gap. There is no need for a gap between shadows.
Trader’s Behavior
In the case of a Bearish Tri Star, we have a market that has been in an uptrend for an extended period. However, the weakening trend is likely indicated by the progressively smaller candlestick bodies. The first Doji raises concerns. The second Doji clearly signals that the market is losing its direction. Finally, the third Doji warns that the uptrend is over. This pattern highlights significant indecision, leading to a reversal of positions.
Sell/Stop-Loss Levels
The confirmation level is determined by the last close. For confirmation, prices should fall below this level.
The stop-loss level is defined as the higher of the last two highs. Following the bearish signal, if prices rise instead of falling and either close above or make two consecutive daily highs above the stop-loss level, without detecting any bullish pattern, the stop-loss is triggered.