Morning Star Doji Candlestick Pattern

The Morning Star Doji is a strong bullish reversal pattern that occurs at the bottom of a downtrend. It’s a variation of the Morning Star pattern, where the second candle is a Doji, signaling extreme indecision in the market. This adds extra weight to the potential for a reversal.

Structure of the Morning Star Doji Pattern:

1. First Candle (Bearish):

• A long red (bearish) candle that continues the existing downtrend.

• This candle confirms that the sellers are in control.

2. Second Candle (Doji with Gap Down)

• A Doji (a candle with a very small body, indicating indecision), which gaps down from the first candle.

• The gap and the Doji indicate market indecision, suggesting that the selling pressure may be weakening.

3. Third Candle (Bullish Confirmation)

• A strong green (bullish) candle that closes well above the midpoint of the first candle.

• This confirms that buyers have regained control and signals the start of an uptrend.

Key Characteristics:

✅ The second candle must be a Doji, showing market indecision and signaling a possible reversal.

✅ The third candle must be a bullish candle, closing above the midpoint of the first candle.

✅ Stronger when forming at a key support level or with high volume.

✅ The gap between the first and second candle helps emphasize the reversal.

Psychology Behind the Pattern:

• The first bearish candle reflects strong selling pressure.

• The second Doji suggests market indecision and that the selling momentum may be fading.

• The third bullish candle confirms that buyers have taken over, suggesting the start of a new uptrend.

Trading Strategy:

📌 Entry: After the third (bullish) candle closes above the first candle's midpoint.

📌 Stop-loss: Below the low of the Doji candle.

📌 Target: Next resistance level or based on a risk-reward ratio (e.g., 1:2).

Since the Morning Star Doji is a high-confidence reversal pattern, it is especially effective when combined with support levels or volume confirmation.