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Written and copyright © 2008-2010 by Thomas N. Bulkowski. All rights reserved.
In my book,
Encyclopedia of Candlestick Charts  , pictured on the right,
I explore the entire range of candlestick patterns from abandoned babies to windows (not exactly A to Z, but you get the idea), in both bull and bear markets, using almost 5 million candle lines
in the tests.
The book takes an in-depth look at 103 candlestick patterns and reports on behavior and rank (3 types: reversal rate, frequency, and overall performance), identification guidelines,
performance statistics (tables of general statistics, height, and volume), trading tactics (tables of statistics on reversal rates and performance indicators),
and wraps each chapter with a sample trade. I share a sliver of that information below. If you like what you read here, then you will love the book. Help support this website and buy a copy
by clicking on the above link.
The bearish tri-star candlestick is an unusual one, but you can say that about the other varieties of candlestick patterns, too. This one acts as a bearish reversal about randomly.
It has a frequency rank of 77 out of 103 candle patterns, so it will be hard to find. And when you do find it, do not look for outstanding performance, either. The overall performance
is well down the list -- toward the bottom, really.
Important Results
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Theoretical performance: Bearish reversal
Tested performance: Bearish reversal 52% of the time
Frequency rank: 77
Overall performance rank: 76
Best percentage meeting price target: 72% (bear market, down breakout)
Best average move in 10 days: -4.29% (bear market, down breakout)
Best 10-day performance rank: 41 (bull market, up breakout)
All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.
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 Bearish Tri-Star
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Discussion
The bearish tri-star candlestick is supposed to act as a bearish reversal and it does, but only 52% of the time. That is about randomly, so do not try to anticipate the breakout
direction. The overall performance rank of 76 is well down the list. That means price is unlikely to form a lasting trend after the breakout.
The best average move 10 days after the breakout is a drop of 4.29% in a bear market. I consider moves of 6% or higher to be good ones, so this falls well short of the goal.
The best performance rank 10 days after the breakout is 41 (bull market, upward breakout).
Identification Guidelines
| Characteristic | Discussion |
| Number of candle lines | Three. |
| Price trend leading to the pattern | Upward. |
| Configuration | Look for three doji candles, the middle one has a body above the other two. |
Three Trading Tidbits
If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book
where the tips appear.
- Bearish tri-star candles that appear within a third of the yearly low perform best -- page 814-815.
- Select tall candles for the best performance -- page 815.
- For the best performance, trade the bearish tri-star in an upward retrace of the primary downtrend -- page 816.
Example
The chart shows one example of a bearish tri-star candlestick, circled in red on the daily scale. It appears as a gang of three doji candlesticks,
the middle of which has a body above the other two. A doji, by the way, is a candle in which the opening and closing prices are within a few pennies of each other.
The breakout from this bearish tri-star is upward when price closes above the top of the candlestick pattern. That joins the uptrend already underway, so the pattern acts
as a continuation candle.
According to my research, the chart shows a good example of where the candle pattern will appear: the start of a retrace that does not carry far.
A better trading setup
is to find the bearish tri-star as part of an upward retrace of a downward price trend.
-- Thomas Bulkowski
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