Morning Doji Star
The Morning Doji Star is a bullish reversal candlestick pattern that signifies a potential end of a downtrend and the start of an uptrend. It's essentially a variant of the Morning Star pattern, with the middle candle being a Doji.
The bearish version of the Morning Doji Star pattern is the Evening Doji Star candlestick pattern.
Here's a breakdown of the Morning Doji Star pattern:
The pattern consists of three candlesticks. The first is a long red (or black) candlestick in a prevailing downtrend, indicating a clear bearish sentiment.
The second candlestick is a Doji — a candlestick where the opening and closing prices are virtually the same, resulting in a very small body. The Doji should gap below the close of the first candlestick and it indicates market indecision.
The third candlestick is a green (or white) candle that opens within the body of the Doji and closes above the midpoint of the body of the first candle, showing a change from the initial bearish sentiment to a bullish sentiment.
The Morning Doji Star is a signal that the bulls have taken over from the bears and that a reversal in trend may be about to occur. As with all candlestick patterns, it's important to wait for confirmation before acting. This could be in the form of a fourth candle that continues the bullish trend or other confirming indicators such as rising volume or a bullish crossover from a technical indicator like the MACD.
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