Candlestick combination “Three Southern Stars”.
On a candlestick chart, an important indicator is the distance between the opening price and the closing price of the time frame.
An acceleration of movement has always been considered a confirmation of an existing trend, and a slowdown in a trend always indicates its weakening.
Often during such a weakening, candlestick figures are formed, one of which is the “Three Southern Stars”.
A candlestick combination consists of three bearish Japanese candles, each subsequent one is smaller than the previous one.
The development scenario is as follows:
In a downward trend, the first to appear is a long bearish candle with a long lower shadow, while at the same time there is no upper shadow, this indicates that the price during the formation of the Japanese candle never exceeded the opening price.
The third candle also opens with a price gap opposite the body of the second candle; it is even smaller in size and has no shadows at all.
The appearance of this candlestick figure significantly increases the likelihood of an uptrend; the signal is confirmed if spinning top candles or other options appear after the “Three Southern Stars”, or other options indicating an even greater slowdown in the trend.
After this, you can place pending buy orders slightly higher than the existing price.
A narrowing of the price channel in most cases leads to a trend reversal; using this principle, you can independently monitor the likely places of the reversal.