Three Stars in the South
After an established downtrend, day one is a long red day with a long lower wick. Day-two is also a red day similar to the first, only with a smaller body and shorter bottom wick. Day-three trades within the second days range and has a small red body with no wick at all (Red Marubozu). The Bullish Three Stars in the South formation suggests weakening in the established downtrend. Although each new day is able to close lower, and despite the fact that sellers are able to drive price down illustrated by the lower wicks, those short positions are not able to get the close price to continue the strong bearish trend. While the pattern predicts a reversal, it may only reflect shorts paring off their position (just a delay or respite in the downtrend). Thus analysts do not usually take the Bullish Three Stars in the South as a strong enough buy signal in itself. Instead analysts use it as an indication to liquidate short positions and watch for buying opportunities. This formation is most significant after a protracted sell-off.
Three Stars in the South Candlestick Pattern