Showing posts with label candlestick-patterns. Show all posts
Showing posts with label candlestick-patterns. Show all posts

STARS CANDLESTICK PATTERNS

STARS CANDLESTICK PATTERNS

 

 Types Of Stars Candlesticks

 

1.MORNING STAR

Morning Star Candlestick Pattern
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                                                       The morning star  is a bottom reversal pattern. Its name is derived because, like the morning star (the planet Mercury) that foretells the sunrise, it presages higher prices. It is comprised of a tall, red real body followed by a small green body which gaps lower (these two lines comprise a basic star pattern). The third day is a green real body  that moves well within the first period's black real body.

                                           

                                                             This pattern is a signal that the bulls have seized control. I will break down this three candlestick pattern into its components in order to understand the rationale behind this last statement.
The market is in a downtrend when we see a red real body. At this time the bears are in command. Then a small real body appears. This means sellers are losing the capacity to drive the market lower. The next day, the strong green real body proves that the bulls have taken over. 


                                                                An ideal morning star would have a gap before and after the middle line's  real body (that is, the star). This second gap is rare, but lack of it  does not seem to vitiate the power of this formation. 

 See Example In a Chart 

Morning Star Candlestick Pattern In a Chart
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2.THE EVENING STAR

Evening Star Candlestick Pattern
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The evening star is the bearish counterpart of the morning star pattern. It is aptly named because the evening star (the planet Venus) appears just before darkness sets in. Since the evening star is a top reversal it should be acted on if it arises after an uptrend. Three lines compose the evening star . The first two lines are a long, green real body followed by a star. 

The star is the first hint of a top. The third line corroborates a top and completes the three-line pattern of the evening star. The third line is a red real body that moves sharply into the first periods green real body. I like to compare the evening star pattern to a traffic light. The traffic light goes from green (the bullish green real body) to yellow (the star's warning signal) to red (the red real body confirms
the prior trend has stopped). 
 

                                                               
                                                     In principle, an evening star should have a gap between the first and second real bodies and then another gap between the second and third real bodies.' However, from my experience this second gap is rarely seen and is not necessary for the success of this pattern. The main concern should be the extent of the intrusion of the third day's black real body
into the first day's green real body. 


Let's See Example In a Chart 

Evening Star Candlestick Pattern In a Chart
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3.THE MORNING AND EVENING DOJI STARS 

 

The Morning And The Evening Doji Star
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                                          When a doji gaps above a real body in a rising market, or gaps under a real body in a falling market, that doji is called a doji star. shows doji stars. Doji stars are a potent warning that the prior trend is apt to change. The session after the doji should confirm the trend reversal. Accordingly, a doji star in an uptrend followed by a long, red real body that closed well into the green real body would confirm a top reversal. Such a pattern is called an evening doji star.



                                       The evening doji star is a distinctive form of the regular evening star. The regular evening star pattern has a small real body as its star (that is, the second candlestick), but the evening doji star has a doji as its star.
The evening doji star is more important because it contains a doji. A doji star during an uptrend is often the sign of an impending top. It is important to note that if the session after the doji star is a green candlestick which gaps higher, the bearish nature of the doji star is negated.


   
                                      In a downtrend, if there is a red real body, followed by a doji star, confirmation of a bottom reversal would occur if the next session was a
strong, green candlestick which closed well into the red real body.
That three candlestick pattern is called a morning doji star .This type of morning star can be a meaningful bottom. If, during a downtrend, a black candlestick gaps under the doji star, the potentially bullish implications of the doji star is voided. This is why it is important to wait for confirmation in the next session or two with doji stars.


                                       If there is an upside gap doji star (that is, the shadows do not touch) followed by a downside gap red candlestick where the shadows also do not touch, the star is considered a major top reversal signal. This is
called an abandoned baby top . This pattern is very rare! The same is true, only in reverse, for a bottom. Specifically, if there is a doji star that has a gap before and after it (where the shadows do not touch) it should be a major bottom. This pattern is referred to as an abandoned baby bottom . It is also extremely rare! The abandoned baby is like a Western island top or bottom where the island
session would be a doji.
        

Let's See Example  In a Chart 

The Morning And The Evening Doji Star In a Chart
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