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Doji Stars - Morning and Evening

By: FX-Strategy Doji Stars - Morning and Evening (Candlestick Reversal Pattern) The Morning Doji Star is a reversal in a downtrend. During a downtrend a long black day is formed. The next day is a short day with the open having gapped lower below the low of the black day but which also closes around the same level as the open. The next day price gaps open once again, but to above the high of the Doji Star and forms a white day. The long black day in the downtrend fuels the underlying bearish sentiment. However, this is not continued on the day of the Doji Star and the gap higher again leaves many traders short and causes squaring of those positions. The Evening Doji Star is a reversal in an uptrend. During an uptrend a long white day is formed. The next day is a short day with the open having gapped higher above the high of the white day but which also closes around the same level as the open. The next day price gaps open once again, but to below the low of the Doji Star and forms a black day. The long white day in the downtrend fuels the underlying bullish sentiment. However, this is not continued on the day of the Doji Star and the gap lower again leaves many traders long and causes squaring of those positions. Doji Star Up and Down (Candlestick Reversal Patterns) The Doji Star may be both bullish and bearish reversals. In a Bullish Doji Star a long black day develops in a downtrend. This is followed by a Doji Star that opens below the low of the black day and closes at, or around, the level of the open. The shadows of the star should not be long. The fact that a Doji Star occurs in a downtrend signifies that the bearish sentiment is becoming weaker with traders uncertain of committing to a short position. A subsequent open above the high of the star would cause further short covering. In a Bearish Doji Star a long white day develops in an uptrend. This is followed by a Doji Star that opens above the high of the white day and closes at, or around, the level of the open. The shadows of the star should not be long. The fact that a Doji Star occurs in an uptrend signifies that the bullish sentiment is becoming weaker with traders uncertain of committing to a long position. A subsequent open below the low of the star would cause further long covering.