Tri-Star

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DEFINITION of 'Tri-Star'

A type of candlestick pattern that signals a reversal in the current trend. This pattern is formed when three consecutive doji candlesticks appear at the end of a prolonged trend.

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

Tri-Star

INVESTOPEDIA EXPLAINS 'Tri-Star'

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 it is discovered, the severe market indecision generally leads to a sharp reversal of the given trend. 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.

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RELATED FAQS
  1. How are Tri-Star patterns interpreted by analysts and traders?

    The tri-star patterns are both uncommon and relatively unreliable. The tri-star can occur in either a bullish or bearish ... Read Full Answer >>
  2. How do I build a profitable strategy when spotting an Tri-Star pattern?

    Because the tri-star pattern is a relatively unreliable reversal signal on its own, a profitable trade strategy must include ... Read Full Answer >>
  3. What do the different colored candlesticks mean?

    Candlestick charts have been used in Western trading for many years and are a very popular method of plotting the price action ... Read Full Answer >>
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    The parametric method, also known as the variance-covariance method, is a risk management technique for calculating the value ... Read Full Answer >>
  5. What is backtesting in Value at Risk (VaR)?

    The value at risk is a statistical risk management technique that monitors and quantifies the risk level associated with ... Read Full Answer >>
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