morning doji star candlestick pattern
Morning Doji Star Candlestick Pattern: Candlestick patterns are a clear visual representation of price movements over a specific period of time. These patterns, consisting of open, high, low, and close, provide insight into market sentiment and potential trend reversals or continuations.
Candlestick patterns help traders make informed decisions about buying and selling stocks by providing valuable information about market dynamics and potential trading opportunities. In this article, we will look at one such candlestick pattern, the Morning Doji Star candlestick pattern.
Morning Doji Star Candlestick Pattern – Definition
The Morning Star candlestick pattern is similar to the Morning Star candlestick pattern with three candlestick patterns indicating a bullish reversal. This pattern is recommended to appear after a downtrend because the probability of a bullish reversal indication derived from the formation of this pattern has a higher probability of success.
This three candlestick formation consists of a long red candle followed by a doji candle, followed by a long green candle.
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Morning Doji Star Candlestick Pattern – Formation
In order for the three candlestick pattern to be called the Morning Dojistar candlestick pattern, several conditions must be met, and those conditions are as follows:
- The first candle should be a long bearish (red) candle in a downtrend.
- The second candle should be a doji with a gap below or near the red candle.
- The third candle should be a long bullish (green) candle that opens above the Doji candle.
Understanding Morning Doji Star Candlestick Patterns
The morning doji star candlestick pattern is generally market sentiment The downward trend is likely to end. The first candle is red as it is part of a downtrend, which increases selling pressure and causes the price to fall.
The second candle formed is the Doji candle, which indicates equal buying and selling pressure. This means there is a bearish downtrend. The third candle is green, indicating a change in market direction as buying pressure overwhelms selling pressure.
Based on the formation of these patterns and the confirmation of other indicators, traders can take long positions in securities.
Morning Doji Star Candlestick Pattern – Trading Strategy
Traders looking to trade based on this pattern should ensure that the trend before the Morning Doji Star candlestick pattern is a downtrend. Once this is confirmed, here are the instructions for trading:
- entry: If the stock price begins to trade higher than the closing price of the third candle of the Morning Doji Star candlestick pattern, traders can take a long position.
- Target: Traders can exit a long position when the stock price reaches near the immediate resistance area. Once this level is reached, you can also take a partial profit on the trade and hold the remaining position until the next resistance level.
- Stop Loss: Traders can place a stop loss near the low price of the morning Dojistar candlestick pattern.
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Morning Doji Star Candlestick Pattern – Example
In the LYKA LABORATORIES 1-day chart above, you can see a morning dojistar candlestick pattern forming at the bottom of a downtrend. As discussed in this article, the stock price saw a bullish reversal after this pattern was formed.
At the time this pattern was formed, traders could take long positions if the stock price started trading above Rs. 112.5 and the stop loss was Rs. 105
Difference Between Morning Star and Morning Doji Star Candlestick Patterns
The Morning Star consists of three candles: a large bearish candle, followed by a small or bullish candle, and finally a large candle that closes above the midpoint of the first candle. On the other hand, the Morning Doji Star candlestick pattern shows a Doji candle rather than a small candle in the second position, indicating increased indecision in the market.
Both patterns imply indecision and bullish momentum, but the Morning Doji Star candlestick pattern is more indecisive.
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conclusion
Lastly, the Morning Doji Star candlestick pattern provides traders with a strong indicator of a possible trend reversal in financial markets. When this pattern is combined with other patterns, technical indicators Market research can provide traders with useful information to make informed decisions.
However, appropriate risk management procedures should always be followed with trading. Traders who incorporate the Morning Doji Star candlestick pattern into their arsenal can better recognize successful trading opportunities and confidently handle market volatility.
Written by Praneeth Kadagi
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