Bullish morning (doji) star

Type:             Reversal

Relevance:    Bullish

Prior Trend:  Bearish

Reliability:    Medium

Confirmation:                     Suggested

No. of Sticks:                     2

Bullish (Doji) Star Pattern is a short candlestick, a spinning top, a highwave or a doji, which gaps from a long black candlestick during a downtrend.

Recognition Criteria:

1. Market is characterized by downtrend.

2. We see a long black candlestick on the first day.

3. Then we see a short candlestick, a spinning top, a highwave or a doji, that gaps in the direction of the previous trend on second day.

4. The shadows of this short candlestick, spinning top, highwave or doji are not long.

Explanation:

Usually a star that follows a long black candlestick in a downtrend indicates a change in the market environment. Bears were in control during the downtrend but now a change is implied by the appearance of a star that shows that the bulls and the bears are in equilibrium. The downward energy is dissipating. Things are not favorable for continuation of a bear market.

Important Factors:

A confirmation of the reversal on the third day is required. This confirmation of the trend reversal may be in the form of a white candlestick, a large gap up or a higher close on the next trading day (third day).