What is Three Stars in the South?

Hello Jane,



Formed near the edge of a downtrend, this bullish display presents three candlesticks. The first bar has an extended lower shadow in addition to its long black body. The second bar features a black body that starts below the former opening and ends at or below the previous closing.




The last bar is black like the others only that it’s a marubozu. This means it doesn’t have wicks. Ordinarily, a marubozu candle implies a session started at the highest and ended at the lowest daily values. Note that the candles decrease in size as the trend continues to show a weakening bearish momentum. This is not only visible in the reducing daily ranges but also the successively higher lows. 
The fact that each candle swallows the subsequent one signals a bullish invasion. To ascertain the bullish control, however, wait for prices to exceed the last candlestick’s midpoint. This pattern is rare despite being accurate in predicting bullish swings.