Bearish Tri-Star Candlestick Patterns Explained: What They Are & How To Trade Them

What Is a Bearish Tri-Star Candlestick Pattern?

A bearish tri-star is a bearish reversal formation.  They occur during uptrends and consist of 1) a doji candlestick, 2) a doji candlestick preceded by a gap up, and 3) a doji candlestick preceded by a gap down.

It is the bearish version of the tri-star pattern, and therefore the opposite of the bullish tri-star pattern.  It is also similar to the bearish abandoned baby, evening star, and evening doji star patterns.

Of course, no candlestick pattern guarantees a particular outcome.  They are more like suggestions than promises.

So, what do tri-star patterns really tell you?

What Tri-Star Patterns Mean

Unlike some patterns, English speakers do not use the Japanese name for this one.

Instead, the term “tri-star” reflects the nature of the pattern, as doji (and other short-line) candles are often referred to as stars.  While this is easier to remember than most pattern names, it doesn’t provide much insight into how the pattern works.

In trading terms:

• First Period – The price opens and closes at the same figure.
• Pre/Post-Market Trading – The price increases.
• Second Period – The price opens and closes at the same figure.
• Pre/Post-Market Trading – The price decreases.
• Third Period – The price opens and closes at the same figure.

This threatens the ongoing uptrend and creates several decision zones that are likely to play a major role in determining trend direction.  If buyers cannot push price back above the formation, it may lead to a bearish reversal and subsequent downtrend.

Figuratively, bearish tri-stars indicate that the trend may have reached a dead end.

How To Recognize Bearish Tri-Star Candlestick Patterns

Patterns are attractive partly because they stand out.

To the untrained eye, they may mean nothing.  But to those with experience, they are something like a beacon.  They draw your attention to a specific segment of price action, encouraging you to look more closely.

To gain this insight, all you need to do is learn the rules and practice finding them on the charts.

• By definition, a bearish tri-star pattern has several requirements.
• It must appear during a general uptrend.
• The first candle must be a doji candlestick.
• The second candle must be a doji candlestick.
• The second candle must open with a gap up.
• The third candle must be a doji candlestick.
• The third candle must open with a gap down.

As you can see, each candlestick has its own rules.

However, some exceptions may be acceptable.

• Not all of the candles necessarily have to be doji, as long as they are all short candles with gaps between them.
• The third candle doesn’t necessarily have to gap down, as long as its upper wick does not exceed the upper wick of the second candle.

You may find better results by stretching some of these criteria (or even adding your own).  For instance, your analysis may reveal that tri-star patterns with larger gaps perform more reliably than those with smaller gaps.  Or, you may find the opposite.

Technically, these variations may fall more accurately under other candlestick reversal patterns, like the abandoned baby.

This is okay though, as implication supersedes classification.  And similar patterns usually have similar implications (though not always).

Yet, that does not mean that these standards are wholly irrelevant.  In fact, certain ones are definitely mandatory, such as the middle candle being a doji that is higher than the other two.  It just means that deeper examination may help you identify more and/or better trading opportunities.

Ultimately, how seriously you take each of these guidelines is up to you.  Don’t forget that the purpose of analyzing candlestick patterns is to interpret underlying price action.  Your pattern labeling skills are less important.

To this end, you need to understand where they fit.

Where Bearish Tri-Stars Fit in the Chart Narrative

The markets are often described as a battle between the bulls and the bears.

Bearish tri-star patterns show that neither side gained any ground on candle one, the bulls made some headway between candles one and two, neither side gained any ground on candle two, the bears pushed back between candles two and three, and neither side gained any ground on candle three.

On the chart, it looks like an arrow pointing up.

In the short-term, it amounts to a veritable standoff.

The question for traders:

“Is this just a short stumbling block in the uptrend or a harbinger of full-on bearish reversal?”

To answer that question, you’ll need more than an understanding of Japanese candlesticks and candlestick patterns.  You’ll want to evaluate both within the context of longer-term chart patterns as well as trend and price levels.  You’ll also want to make use of your own chart markup and indicators.

Explore the history of your preferred asset(s) with respect to tri-star candlestick patterns and apply your findings to your own trading style.

The more thorough your technical analysis, the more clear the story in the charts becomes.

How To Trade Bearish Tri-Star Candle Patterns

Bearish reversal patterns are great places to enter shorts or exit longs, especially when you see them coming.

As such, bearish tri-star candle patterns serve as easy-to-spot signs of potential changes from bullish to bearish momentum.  They may even lead to cycle-ending tops.

In most cases, you can assign greater weight to multi-stick patterns than single candles because they provide more information over a longer duration.  However, you should wait for all candles to close before making any decisions.  Otherwise, there is a good chance that you’ll get caught in a fake out.

Additionally, there are a few other things you should consider before trading candlestick patterns.

First and foremost, they are never a “sure thing.”  According to Bulkowski’s Encyclopedia of Candlestick Patterns, bearish tri-stars have a hit rate of 52% (while bullish tri-stars have a hit rate of 60%).  This is little better than a coin flip.

What’s more, candlestick patterns do not have uniform price targets or measured moves like chart patterns do.  That makes position management trickier.

Plus, failed reversal patterns often lead to continuation or consolidation.  Thus, you’d be wise to seek additional confirmation factors to increase your odds of a successful trade.

Some of these include:

• Volume – Reversals are often accompanied by elevated trading volume.  For tri-star patterns, you want to see a spike on the second (or shortly after the final candle).
• Price Formations – Bearish reversal patterns that form just below important resistance levels tend to be more reliable.  They also reinforce the strength of these levels.
• Oscillator Shift – Oscillating indicators like the RSI or stochastics are commonly used to identify reversals by analyzing slope, percentile, and/or divergence.

The more corroborating elements are present, the more confident you can be about the strength of a bearish tri-star reversal signal.

Even so, it would be difficult to form a successful trading strategy built around any single candlestick pattern.  There simply isn’t enough there to develop a strong edge.  It would still be suboptimal with an expert understanding of trading math, order execution, market psychology, risk management, options, and automation.

In essence, tri-star patterns are more useful idea givers than trade makers.

Better yet, you’ll probably find more success building your strategy around other tools and using candlestick patterns as the final point of confirmation.

Other Candlestick Pattern Types

There are many bearish reversal candlestick patterns.

The bearish tri-star is only one.

Likewise, there are many bullish reversal candlestick patterns.  Not to mention, you have bearish continuation candlestick patterns and bullish continuation candlestick patterns.

For most traders though, tackling all candlestick patterns at once may be the best learning path.

• Abandoned Baby – Bearish | Bullish
• Breakaway – Bearish | Bullish
• Counterattack Lines – Bearish | Bullish
• Doji Star – Evening | Morning
• Engulfing – Bearish | Bullish
• Harami – Bearish | Bullish
• Harami Cross – Bearish | Bullish
• In Neck – Bearish | Bullish
• Kicking – Down | Up
• Ladder – Top | Bottom
• Last Engulfing – Top | Bottom
• Mat Hold – Bearish | Bullish
• Matching – High | Low
• Meeting Lines – Bearish | Bullish
• On Neck – Bearish | Bullish
• Separating Lines – Bearish | Bullish
• Star – Evening | Morning
• Stomach – Below | Above
• Tasuki Gap – Downside | Upside
• Three Inside – Down | Up
• Three Methods – Falling | Rising
• Three Outside – Down | Up
• Tweezer – Top | Bottom
• Window – Falling | Rising

Sure, it is quite a long list.

Luckily for us all, you don’t need to memorize every pattern and its criteria.  Instead, focus on price action and technical analysis principles.  The goal is to be able to look at any group of candlesticks and understand what they mean.

The more candlestick patterns you study, the easier this will become.

Takeaways

To review:

Bearish tri-stars are a type of candlestick pattern that signal a potential bearish reversal.  While not a guarantee, their appearance may indicate that market conditions are shifting in favor of sellers.  When used properly, this can help you find winning trades.

Of course, there are other candlestick patterns that you should learn about.  Still, the ability to recognize patterns is not enough to trade successfully on its own.

Nonetheless, you’ve now added one more weapon to your trading arsenal.

Have questions or more information to add?  Contribute to the conversation in the comments below!  Or, if you know someone who could benefit from this post, share it with them.  You can also check out our Candlestick Patterns Guide to improve your candlestick analysis skills.