UK Accounting Glossary
The tri-star is a rare candlestick charting pattern that signals a trend reversal. Three consecutive Doji candles characterize a tri-star. In a bullish tri-star, the Doji candles occur at the end of a downtrend. The second candle in the tri-star gaps below the first candle and the third candle gaps above the second. Collectively, the three Doji candles in the bullish tri-star suggest market indecision as sellers lose strength and buyers begin showing interest in a security. A white candle on the fourth day would confirm the reversal and the start of an uptrend. In a bearish tri-star, the doji candles occur at the end of an uptrend. The second candle in the tri-star gaps above the first candle and the third candle gaps below the second. Collectively, the three Doji candles in the bearish tri-star suggest market indecision as buyers lose strength and sellers begin to gain the upper hand. A black candle on the fourth day would confirm the reversal and the start of a downtrend. In either the bullish or bearish instance, traders consider a tri-star formation to be a fairly reliable reversal pattern.
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This glossary post was last updated: 5th February 2020.