Basics of a Tri-Star Pattern and How to Successfully Trade It (2024)

What Is a Tri-Star?

A tri-star is a three line candlestick pattern that can signal a possible reversal in the current trend, be it bullish or bearish.

Key Takeaways

  • A tri-star is a three line candlestick pattern that can signal a possible reversal in the current trend, be it bullish or bearish.
  • Tri-star patterns form when three consecutive doji candlesticks appear at the end of a prolonged trend.
  • A tri-star pattern near a significant support or resistance level increases the probability of a successful trade.

Understanding Tri-Star

This pattern forms when three consecutive doji candlesticks appear at the end of a prolonged trend. The first doji indicates indecision between the bulls and the bears, the second doji gaps in the direction of the prevailing trend and the third doji changes the market’s sentiment after the candlestick opens in the opposite direction of the trend. The shadows on each doji are relatively shallow signaling a temporary reduction in volatility.

A single doji candlestick is an infrequent occurrence that is used by traders to suggest market indecision. Having a series of three consecutive doji candles is extremely rare, but when discovered, the severe market indecision usually leads to a sharp reversal of the given trend. Traders can use stock market scanning software to help them locate the pattern. The 'three stars' pattern can also be used to signal the reversal of downward momentum when the pattern is formed at the end of a prolonged downtrend.

The chart below illustrates a bearish tri-star pattern at the top of the uptrend and could be interpreted to mark the beginning of a shift in momentum.

Basics of a Tri-Star Pattern and How to Successfully Trade It (1)

Trading the Tri-Star Pattern

The below assumes the tri-star pattern forms after an uptrend:

  • Entry: Traders could place a sell stop-limit order just below the third doji candle's low. This entry confirms that the market is moving in the trader's intended direction. Entering the market when the third doji candle closes may suit aggressive traders. This entry allows traders to set a tighter stop, but not confirm the trend.
  • Stop: The high of the second doji is the top of the tri-star pattern and a logical place for a stop-loss order. Aggressive traders could set their stop above the high of the third doji, but risk getting stopped out by minor price spikes.
  • Exit: A profit target could be set using a multiple of the initial risk taken. For instance, if a trader uses a $2 stop loss, they could place an $8 profit target. Traders might also use a certain retracement of the trend that precedes the tri-star pattern to take profits. For example, profits may be taken if prices retrace 10% of the previous move.

Tri-Star Support and Resistance Considerations:

Ideally the tri-star pattern should form near a significant support or resistance level to increase the probability of a successful trade. Support and resistance might come from a horizontal price level, a key moving average or a psychological round number. For example, the high the second doji may intersect the 200-day moving average. At the completion of the tri-star pattern, traders can also look for divergence between an indicator and price to confirm the prevailing trend is losing momentum.

Basics of a Tri-Star Pattern and How to Successfully Trade It (2024)


Basics of a Tri-Star Pattern and How to Successfully Trade It? ›

Key Takeaways

What is the 3 candle rule in trading? ›

It consists of three successive candlesticks – the first is long and bearish and is followed by a smaller bullish bar that is completely engulfed by the first one. The third candle is bullish and closes above the second candle's high, suggesting a potential shift from a downtrend to an uptrend.

Is a tri-star doji bullish or bearish? ›

A tri-star doji appearing after a downtrend is bullish and signals an uptrend, a tri-star doji that appears at the end of an uptrend is bearish. It indicates a trend reversal in the market.

What is the success rate of the three white soldier pattern? ›

Three white soldiers are one of the rarest candlestick patterns that appear almost after 3000 candles in the chart. However, the success rate is around 80% which means every time this pattern is displayed, the market has shown a good reversal and brings an opportunity to earn profit in a long position.

What is the three white soldiers rule? ›

Three white soldiers is a bullish candlestick pattern that is used to predict the reversal of the current downtrend in a pricing chart. The pattern consists of three consecutive long-bodied candlesticks that open within the previous candle's real body and a close that exceeds the previous candle's high.

Which is the most profitable candlestick pattern? ›

Top 5 Most Powerful Candlestick Patterns for Intraday Trading
  • Three Line Strike: The bullish three-line strike reversal pattern carves out three black candles within a downtrend. ...
  • Two Black Gapping: ...
  • Three Black Crows: ...
  • Evening Star: ...
  • Abandoned Baby:

What is the 8 10 candle rule? ›

The 8-10 Rule: Place one 8 ounce candle for every 10 feet radius of room.

What are the three strong bullish candlestick patterns? ›

Six bullish candlestick patterns
  • Inverse hammer. A similarly bullish pattern is the inverted hammer. ...
  • Bullish engulfing. The bullish engulfing pattern is formed of two candlesticks. ...
  • Piercing line. ...
  • Morning star. ...
  • Three white soldiers. ...
  • Six bearish candlestick patterns. ...
  • Shooting star. ...
  • Bearish engulfing.

What is tri star candlestick pattern? ›

A tri-star is a three line candlestick pattern that can signal a possible reversal in the current trend, be it bullish or bearish. Tri-star patterns form when three consecutive doji candlesticks appear at the end of a prolonged trend.

How do you trade in Morning doji star? ›

The Morning Doji Star is a bullish reversal pattern, being very similar to the Morning Star. The only difference is that the Morning Doji Star needs to have a doji candle (except the Four-Price Doji) on the second line. The doji candle (second line) should not be preceded by or followed by a price gap.

What is the 3 white soldiers setup? ›

To identify the three white soldiers pattern, look for three consecutive green or white candlesticks. Each must open and close progressively higher than the first. The candlesticks should have big bodies and very small (or no) wicks. As mentioned, you are likely to see the pattern at the bottom of a downtrend.

What is the difference between three black crows and three white soldiers? ›

Three white soldiers are simply a visual pattern indicating the reversal of a downtrend whereas three black crows indicate the reversal of an uptrend. The same caveats apply to both patterns regarding volume and confirmation from other indicators.

What is a soldier pattern? ›

The "Three White Soldiers" candlestick pattern is a compelling bullish candlestick formation that typically unfolds during a downtrend. This pattern consists of three consecutive long and bullish candlesticks, each opening higher and closing significantly higher than the previous one.

What is the soldier's rule? ›

Soldiers do not kill or torture any personnel in their custody. Soldiers collect and care for the wounded, whether friend or foe. Soldiers do not attack medical personnel, facilities, or equipment. Soldiers destroy no more than the mission requires.

What is the opposite of the three white soldiers? ›

The Three Black Crows pattern is the opposite of the Three White Soldiers pattern. While the Three Black Crows pattern signifies a bearish reversal, the Three White Soldiers pattern indicates a bullish reversal.

What is the 3 trade rule? ›

Essentially, if you have a $5,000 account, you can only make three-day trades in any rolling five-day period. Once your account value is above $25,000, the restriction no longer applies to you. You usually don't have to worry about violating this rule by mistake because your broker will notify you.

What is the law of 3 trading? ›

Rule of three is an unwritten rule that recommends that a trader should use three timeframes before they initiate a trade. Proponents believe that looking at three timeframes will help a trader identify all the necessary points they need to execute a trade.

What is a 3 top candlestick? ›

A triple top is formed by three peaks moving into the same area, with pullbacks in between, while a triple bottom consists of three troughs with rallies in the middle. While not often observed in everyday market trading, triple tops and bottoms provide compelling signal to technical traders for trend reversals.

What is a 3 line strike candle? ›

The three-line strike candlestick chart pattern is a pattern with specific criteria that do not occur often. This pattern is a continuation pattern that is a pause that refreshes higher and helps identify a consolidation in a trend. This differs from a reversal pattern that generally points to changes in a trend.

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