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The difference being, a lot of the Doji candles aren’t reliable and will prove continuation as much as reversal. The only problem with waiting for the confirmation is that you’re Dividend not the only one. If it works, a lot of people who don’t even know what a Morning Star candlestick pattern is will notice that the winds have changed and hop onto the new trend.
It will not appear just anywhere and there aren’t as many price swings inside the daily period of the candle itself. The Star is not indecisive, like Dojis – the bearish traders simply can’t push any further and are forced to give into the bullish trend. In this new market, the demand may be off-the-charts, and you’ll simply be unable to buy the security early enough. You can try and estimate whether the Star is going to result in the bullish turn or not. Morning Star candlestick pattern occurs in the culmination of a downward trend and is followed by a rising upward trend.
This happens because this pattern is almost always in the bottom of the trend, meaning it’s close to the support zone. It often leaves the supply of the traded security too big, which leads to the lack of demand and the increase of value. This change of mood happens during the second day, although it doesn’t always mean that the trend is about to change. There are also other indicators and tools, and you are generally advised to use as many as you can, considering you can read them. But for starters, you can just use the combination of pivot points, your own feeling and the intraday readings on the third day. The pattern can be caused by many various things, but the general idea is that Morning Star is caused by the trend slowing down during the second stage and then straightening out into a completely opposite direction.
Logic Behind Morning Star
Lucky you, the ‘Morning Star’ is one of the most common candlestick formations. Basically, when it happens, it will turn a bearish price movement into a bullish one. Like many still, it’s only a bullish pattern – meaning it will only result in a bullish trend if done right.
- Research and experiences indicate that trading in the capital market may be risky and unsuitable for everyone.
- Like many still, it’s only a bullish pattern – meaning it will only result in a bullish trend if done right.
- Naturally, for any security, the floor would be different – some like to fluctuate over time a lot more than others.
- However, the content issued by the company and/or ‘Gold’ does not address certain customer limits and it is advisable to consult a personal investment adviser before making any decision.
In trading, it’s very important and beneficial to memorize patterns of candlesticks. If you know how to spot one, you’ll be able to anticipate the next step before it happens. You shouldn’t try to memorize all of them, but learning the most commons ones is mandatory. Naturally, for any security, the floor would be different – some like to fluctuate over time a lot more than others. But the price will still have to turn around once it drops low enough. It’s not magic – it’s just a combination of supply, demand, volume and other factors.
Morning Star Candlestick Pattern: Spotting & Reading
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If you aim to trade frequently and look at the graphs on a regular basis, you’ll be seeing this one a lot. For amateurs, that would be just generic group of candlesticks. Carolyn Huntington is an economist, professional trader, and analyst. She made her first big deal in her student years with a profitable investment in Facebook stock. Over the years of trading, Carolyn has developed its own strategy that allows even those who have never traded on the stock exchange before to earn money. She also creates market forecasts and advises major shareholders, compiles investment portfolios, and teaches how to work with automated advisors.
Author: Daniel Dubrovsky