| Three Stars in the South |
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Pattern: reversal
Reliability: moderate
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Identification
A long black day with a long lower shadow is followed by a similar but smaller
black day whose lower shadow is shallower than the first day. The third
day is a small Black Marubozu (open is the high of the day and the close
is the low of the day) that lies within the second day’s trading range.
The Psychology
Three Stars in the South is a bottoming pattern. Each of the successive
black candles is slightly less bearish that the previous one, so the trend
is slowly weakening. As long as the low of the first candle is held, and
a white candle on volume can form soon after, a reversal may be in the
works.
The bullish Three Stars in the South is similar to the bearish Three
Black Crows.
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