The Stock Stethoscope

The “Morning Doji Star” pattern is a bullish candlestick reversal pattern that consists of three candles. It is a relatively reliable pattern that signals a potential change in trend from bearish to bullish. Here are the details of the pattern:

1) The first candlestick is a long bearish candlestick, indicating that sellers have control of the market.

2) The second candlestick is a Doji, which is a small candlestick with a narrow range that opens and closes at or near the same price. The Doji indicates indecision in the market and that the buyers and sellers are evenly matched.

3) The third candlestick is a bullish candlestick that opens above the Doji’s high price and closes above the first candlestick’s midpoint. The bullish candlestick indicates that buyers have taken control of the market, and a potential trend reversal is underway.

The Morning Doji Star pattern is more reliable when it occurs after a downtrend and has a gap between the first and second candlestick. The gap indicates a significant change in market sentiment, as buyers are willing to pay higher prices than the previous day’s low.

Traders often use additional technical analysis indicators to confirm the pattern, such as the Relative Strength Index (RSI) or Moving Average Convergence Divergence (MACD) indicators. Additionally, traders typically look for high trading volume on the third candlestick to confirm the bullish trend reversal.

In summary, the Morning Doji Star pattern is a bullish candlestick reversal pattern that consists of three candles, and it signals a potential change in trend from bearish to bullish. Traders typically use additional technical analysis indicators to confirm the pattern and look for high trading volume on the third candlestick to confirm the bullish trend reversal.