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 effective is creating trade entries after spotting a Tri-Star pattern?

    The tri-star patterns, both bullish and bearish, are about as rare as they are unreliable. Comprised of three consecutive ... Read Full Answer >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. What is the difference between the cost of capital and the discount rate?

    The cost of capital refers to the actual cost of financing business activity through either debt or equity capital. The discount ... Read Full Answer >>
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