This pattern consists of three consecutive black sails, which consecutively have lower closures, and higher minimums in a slow deterioration of the downtrend.
1. The market is dominated by a downward trend.
2. On the first day there is a black candle with a priceless upper shadow and a long lower shadow.
3. The next day is another black candle with a close below the previous day's close and with an opening in the range of the previous day's body. However, it has a higher minimum.
4. The last day is a small black Marubozu with a higher minimum.
Special Conditions and Flexibility
The first candle should be of a normal length or long, or a black candle with a long lower shadow. The following black candles should be opened within the range of the previous day's body, and closed below the previous day's close. The bodies of the three black candles and their lower shadows must be shortened little by little.
Behavior of the Inverter
The Three Stars in the South reflects a slow deterioration of the bearish trend, which is characterized by a decrease in the daily price range and consecutively higher minimums. The enthusiasm in the purchase is reflected by the long lower shadow of the first day. The next day it opens to a higher level, it trades less, but its minimum is not lower than the minimum of the previous day. The minimum of the second day is greater than that of the first day. Then on the third day you see a small Marubozu, which is limited by the range of movement of the previous day. The ascending lows cause discomfort among those who made short selling. In addition, the stability of the last day of the pattern reflects an undecided market, with hardly any price movement. Those who made short sales are now willing to cover, if you observe the slightest upward movement. Everything indicates that the tide is oriented little by little in favor of the bulls.