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Definition: Get the highest rated stock from Americanbulls for this pattern >>>
This is a three-candlestick formation that signals
a major bottom. It is composed of a first long black
body, a second small real body, white or black, gapping
lower to form a star. These two candlesticks define
a basic star pattern. The third is a white candlestick
that closes well into the first session’s black
real body. Third candlestick shows that the market turned
bullish now.
Recognition Criteria:
1. Market is characterized by downtrend.
2. We see a long black candlestick in the first day.
3. Then we see a small body on the second day gapping
in the direction of the previous downtrend.
4. Finally we see a white candlestick on the third day.
Explanation:
We see the black body in a falling market suggesting
that the bears are in command. Then a small real body
appears implying the incapacity of sellers to drive
the market lower. The strong white body of third day
proves that bulls have taken over. An ideal Bullish
Morning Star Pattern preferably has a gap before and
after the middle candlestick. The second gap is rare,
but lack of it does not take away from the power of
this formation.
Important Factors:
The stars may be more than one, two or even three.
The color of the star and its gaps are not
important.
The reliability of this pattern
is very high, but still a confirmation in the form of
a white candlestick with a higher close or a gap-up
is suggested.
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