Candlestick patterns are among the most popular tools for analyzing market movements. Among these, the bullish and bearish tri-star doji patterns stand out as powerful reversal indicators.
👉 Discover advanced trading strategies to maximize your market edge.
What Is a Tri-Star Doji?
A tri-star doji is a three-candle reversal pattern that forms at the end of a trend. It consists of three consecutive doji candles (where opening and closing prices are nearly equal), creating a triangular formation. This pattern signals a potential trend reversal:
– Bullish tri-star doji: Appears after a downtrend, hinting at upward momentum.
– Bearish tri-star doji: Forms after an uptrend, suggesting a downward shift.
Key Characteristics
Bearish Tri-Star Doji
- Preceding trend: Bullish.
- Candles: Three dojis.
- Gaps: Second candle gaps up; third candle gaps down.
Bullish Tri-Star Doji
- Preceding trend: Bearish.
- Candles: Three dojis.
- Gaps: Second candle gaps down; third candle gaps up.
Market Psychology Behind the Tri-Star Doji
Candlestick patterns reflect trader sentiment. Here’s how the tri-star doji reveals market indecision and reversal potential:
Bullish Tri-Star Doji Example
- Bearish trend exhaustion: Sellers dominate, but uncertainty grows.
- First doji: Buyers and sellers reach equilibrium.
- Second doji: Gaps down but closes near open—bears weaken.
- Third doji: Gaps up, confirming bullish pressure.
👉 Learn how to backtest these patterns for higher accuracy.
Trading Strategies for Tri-Star Doji
Strategy 1: Volume Confirmation
Volume validates the pattern’s strength:
– Conditions:
– Volume spikes on the second or third doji.
– Volume exceeds its 20-period moving average.
– Action: Enter trades only if volume supports the reversal signal.
Strategy 2: Seasonality Filters
Markets often follow seasonal trends:
– Monthly trends: E.g., stocks rally in December.
– Intraday patterns: Forex pairs may reverse at specific hours.
| Filter Type | Application Example |
|---|---|
| Day of Week | Trade bullish dojis on Mondays (historically strong). |
| RSI Alignment | Pair bearish dojis with RSI > 70 (overbought). |
FAQs
1. How reliable is the tri-star doji pattern?
While potent, it requires confirmation from volume, indicators (e.g., RSI), or trendlines to reduce false signals.
2. Can tri-star dojis appear in all markets?
Yes, but effectiveness varies. Test them in forex, stocks, or crypto to find optimal conditions.
3. What’s the best timeframe for trading tri-star dojis?
Daily or 4-hour charts often work best, but backtest to identify ideal settings for your asset.
4. How do gaps impact the pattern?
Gaps emphasize sentiment shifts—larger gaps increase reversal likelihood.
Final Tips
- Backtest: Validate patterns with historical data.
- Combine tools: Use tri-star dojis with moving averages or Fibonacci levels.
- Risk management: Always set stop-loss orders.
Mastering the tri-star doji can sharpen your reversal trading—start testing today!