Candlestick Pattern :

• Morning Doji Star.
• Also known as the Bullish Abandoned Baby.

Description

• Widely regarded as one of the most common and effective patterns.
• It is a Bottom Reversal pattern depicted by 3 candlesticks.
• The 1 st candle is a long bearish candle that forms at the bottom of a down trend.
• The 2nd candle that forms is is a Doji that “gaps” downwards.
• The 3rd candle that forms “gaps” upwards into a long bullish candle that closes at least 50% or more into the 1st candle’s real body.

Trading Psychology :

• The Bears are running the show with Price moving downwards indicating the continuation of the down trend shown by the 1st candle.
• As shown in the 2nd candle, a gap away from the downward move means that there is a sudden increase in conviction of the Bears to push the price further down.
• However, the conviction suddenly stalls and reverses direction with the Bulls making a challenge and ending the session with a draw or stalemate, signified by the doji.
• But the fact of the matter is that the Bulls have already began to make their move to reverse the trend and momentum is on their side.
• The bullish 3rd candlestick clearly indicates that a reversal of sentimental in the opposite direction has already taken place.
• And once the real body of the 3rd candle gradually extend upwards, beyond 50% of the 1st candlestick’s real body, the down trend is broken and the Bulls have taken full control.
• Price is on its way up.

My Thoughts :

• The Morning Doji Star candlestick pattern is definitely one of the most accurate and reliable candlestick patterns around.
• In my opinion, it has a slight advantage over is sibling, the Morning Star candlestick pattern in terms of accuracy, but unfortunately, it doesn’t occur as often.
• An important point to note is that in Forex Trading, since it is being traded 24 hours,  “Gaps” between the closing price and opening price are very rare unlike other financial markets.
• That is why when identifying such patterns in FX trading, we can ignore the “Gap” portion of the candlestick pattern.
• Perhaps because of the “Lack Of Gaps” in Forex Trading, it is more commonly referred to as the Morning Doji Star rather than the Bullish Abandoned Baby.

However, even though this particular candlestick pattern is highly reliable, my advice is still not to take all the signals that comes for granted, watch what price is doing first, Price Action precedes all indicators and patterns.

Have a safe and profitable trading day ahead.

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