BULLISH DOJI
STAR
| Type: | Reversal |
| Relevance: | Bullish |
| Prior Trend: | Bearish |
| Reliability: | Medium |
| Confirmation: | Suggested |
| No. of Sticks: | 2 |
Bullish Doji Star Pattern is 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 Doji that gaps in the direction of the previous trend on second day.
4. The shadows of this 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).