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What is Three Stars in the South: Bullish Reversal Pattern?

Three stars in the South is a bullish reversal pattern. This pattern is seen near the end of the downtrend and consists of 3 candles. It shows deteriorating of selling pressure. In this pattern, first candle is a large black candle, having small or no upper shadow, but has a long lower shadow. Second candle is a smaller replica of previous candle. It opens gap up but ends lower. Second candle get engulfed completely by the first candle. Third candle gets engulfed completely by the second candle and is a black marubozu.

Strategy: Long positions can be initiated after the high of second candle is broken on upside.

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