Candlestick Pattern
Posted On: December 10, 2025
The Bullish Reversal Secret: Understanding the Three Stars in South Pattern
The Three Stars in the South is a rare but powerful bullish reversal pattern that forms at the bottom of a downtrend. It signals that the selling pressure is weakening and a potential trend reversal to the upside may occur.
How to Identify the Pattern
The pattern consists of three consecutive bearish candles, each with specific characteristics:
First Candle
A long bearish (black/red) candle. Appears in a strong downtrend. Shows heavy selling pressure.
Second Candle
Another bearish candle, but smaller than the first one. The low is higher than the previous candle’s low.
Indicates sellers are losing strength.
Third Candle
A very small bearish candle (can be a small body or near-doji). Opens and closes within the body of the second candle. Its low is higher than the low of the second
How traders use
Identify Entry Points
Once confirmation appears, traders may: Enter a long position above the high of the confirmation candle
Use limit orders near support levels if the price retraces slightly
The goal is to enter when bullish momentum begins.
Use Higher Lows as Support Levels
Each candle in the pattern forms a higher low, creating strong support.
Traders often mark these support zones for:
Setting stop-loss levels. Planning re-entry on pullbacks
Confirming trend reversal strength
Set Strategic Stop-Loss
To manage risk, traders commonly place a stop-loss below the lowest low of the three candles.
Conclusion
The Three Stars in the South pattern is a strong bullish reversal signal that appears after a steep downtrend. Although all three candles are bearish, their steadily weakening size and progressively higher lows indicate diminishing selling pressure and a potential shift in market sentiment. This pattern reflects a gradual loss of momentum by the bears, suggesting that buyers may soon step in to push prices upward. While rare, the Three Stars in the South is considered a reliable indicator of a possible trend reversal when confirmed with additional technical signals or volume support.
Where can I see further insights on this stock?
xCalData offers unbiased insights into stocks. Download the app from google play. For Actionable Intelligence, subscribe to xCalData app on Android devices: Download here
For Actionable Intelligence, subscribe to xCalData app on Android devices: https://tinyurl.com/downloadxCalData
Popular Posts
-
Stock of Interest . August 23, 2024
#HSCL (NSE) Stock Report | 23 Aug 2024
-
Stock of Interest . August 23, 2024
Add Zerodha trading account to xCalData
-
Stock of Interest . August 23, 2024
What is xCalData , how to use it and how accurate is it?
-
Stock of Interest . August 23, 2024
Jurik Moving Average (JMA): A Profit Trading Insight