Tri-Star – Definition, How it Works, Types, Calculation, and Trading

The Tri-Star Doji is one of the rarest and most insightful candlestick patterns in technical analysis. Formed by three consecutive doji candles, it often marks a turning point in price momentum. Whether you’re navigating the forex, crypto, or equity markets, spotting a Tri-Star can help you anticipate reversals and plan better trades. In this guide, we’ll explain how the Tri-Star forms, when to trade it, its strengths and limitations, and how you can use TradeSmart to trade it with confidence.

What is the Tri-Star Doji pattern?

The Tri-Star Doji is a rare but highly significant candlestick pattern used in technical analysis to anticipate potential trend reversals. It is composed of three consecutive doji candles, each indicating strong market indecision, with minimal difference between opening and closing prices and long upper and lower shadows.

This pattern has its roots in traditional Japanese candlestick charting, where early rice traders identified the formation as a reliable indicator of turning points in the market. Despite its rarity, the Tri-Star remains relevant today due to its ability to signal exhaustion in ongoing trends.

There are two main types of Tri-Star patterns:

• Bullish Tri-Star: Forms at the end of a downtrend, suggesting a possible reversal to the upside.
• Bearish Tri-Star: Appears at the top of an uptrend, hinting at a potential move lower.

Recognising this pattern helps traders prepare for pivotal market shifts, especially when combined with confirmation tools available on platforms like TradeSmart.

How is the Tri-Star Doji Formed?

The Tri-Star pattern emerges during periods of exhaustion and typically appears at the end of a strong trend, when neither buyers nor sellers can maintain momentum.

1. First Doji: Marks the initial pause in the prevailing trend, signalling market uncertainty.
2. Second Doji: In a Bearish Tri-Star, the second doji forms above the other two. In a Bullish Tri-Star, it appears below the first and third doji.
3. Third Doji: Confirms the reversal signal. Its position strengthens the case for a potential trend shift.

The structure and alignment of these three doji candles are what make the Tri-Star pattern distinct. When used effectively, it provides traders with early insights into market reversals, especially when supported by volume and additional indicators.

When Is The Best Time To Trade Using The Tri-Star Doji?

Timing is key when trading the Tri-Star Doji. Due to the pattern’s rarity and high reversal potential, precision in entry and exit points is essential.

Optimal entry: Enter immediately after the third doji closes. For tighter control, use a stop-limit entry just above (bullish) or below (bearish) the third doji.

Stop-loss placement: Place a conservative stop at the second doji’s high (bearish) or low (bullish). A more aggressive stop can go just beyond the third doji.

Profit targets: Use a 2:1 or 3:1 risk-reward ratio. Adjust targets based on volatility and context.

With TradeSmart’s strategy builder and custom stop/target tools, traders can fine-tune these parameters with precision to optimise their setups around rare patterns like the Tri-Star Doji.

What are the Advantages of the Tri-Star Doji Pattern?

• Trend reversal insight: Indicates potential exhaustion and directional change in volatile markets.
• Cross-market flexibility: Effective across stocks, forex, crypto, and commodities.
• Strategic confirmation: Enhances confidence when combined with TradeSmart’s technical indicators.

What are the Disadvantages of Tri-Star Doji?

• Infrequent appearance: Rare formation limits trading opportunities.
• Lack of guaranteed follow-through: Needs confirmation to validate signals.
• Unclear magnitude: Doesn’t indicate how far or how long a reversal will go. Use other tools to set targets.

What Does Green Tri-Star Doji Tell?

The Green Tri-Star Doji—also known as the Bullish Tri-Star—is a powerful reversal pattern that forms at the bottom of a downtrend. It features three consecutive doji candles and often reflects a shift in momentum from bearish to bullish.

• First Doji: Indicates indecision and halts the prevailing bearish trend.
• Second Doji: Gaps lower, suggesting persistent uncertainty.
• Third Doji: Gaps higher, signalling that buying interest may be returning.

To strengthen the signal, traders look for:

• A break above the high of the Tri-Star formation
• Bullish divergence on RSI
• Increased volume confirming renewed buying

TradeSmart’s chart overlays and indicator alerts make it easier to validate and act on these rare but powerful signals.

Where Is The Tri-Star Doji Commonly Used?

The Tri-Star Doji can be applied across all major trading markets, including:

• Forex: Useful for spotting reversals during session transitions in volatile currency pairs.
• Equities: Helps detect momentum shifts after sharp rallies or pullbacks.
• Cryptocurrencies: Works well in fast-moving assets like Bitcoin or Ethereum.
• Commodities: Identifies turning points in cyclical markets like gold or oil.

TradeSmart’s market coverage includes all these asset classes, making it easy to apply this pattern across diverse portfolios.

What are Other Types of Doji Patterns besides Tri-Star?

• Standard Doji: Neutral sentiment with narrow open-close range. Precedes directional moves.
• Dragonfly Doji: Long lower shadow, bullish reversal at downtrend bottoms.
• Gravestone Doji: Long upper shadow, bearish reversal at uptrend peaks.
• Long-Legged Doji: Extended shadows on both sides. High indecision followed by sharp move.
• Four-Price Doji: Rare pattern with identical open, high, low, and close. Signals extreme indecision.

Knowing how to interpret these variations enhances a trader’s understanding of market psychology, allowing for more nuanced analysis across different market conditions.

Conclusion

The Tri-Star Doji pattern may be rare, but when identified correctly, it offers valuable insight into potential market reversals. Whether you’re trading currency pairs, crypto assets, or stocks, understanding this pattern can help you anticipate critical shifts in sentiment. Pair it with TradeSmart’s charting tools, confirmation indicators, and market coverage to sharpen your strategy and improve decision-making. Visit TradeSmart now and discover how expert-level pattern recognition can enhance your trading edge.