The Morning Star And The Three White Soldiers Three Stick Candlestick Patterns
If you want to become a serious trader then you must master the art of candlestick charting. There are dozens of candlestick patterns that warn of the potential trend reversal as well as trend continuation. There are simple as well as complex candlestick patterns. Morning Star is a three stick candlestick pattern that takes three days to form on the charts and is considered to be a complex pattern. It is almost similar to the Bullish Doji Star Pattern.
In case of the Morning Star and the Bullish Doji Star Patterns, the first day is a large bearish candle, the second day in case of the Doji Star Pattern is a True Doji while in case of the Morning Star it is almost a Doji. The price action behind these two patterns is almost the same.
The first day is a down day with a large bearish candle forming as happens in a downtrend. The second day starts with a gap opening indicating that bears are still in action and are continuing to push the prices down. For the rest of the day, there is a tight contest between the bulls and bears and the open and the close price are almost the same. The third day is extremely bullish with the bulls pushing the prices up regaining the lost ground on the last two days. When either these two patterns appear on the chart, it means a trend reversal.
The Three White Soldiers is another bullish trend reversal pattern that takes three days to form with three bullish candles in a row. When this pattern appears in down trend, it signals a quick trend reversal and start of an uptrend.
The low, high and the open and close on the second day should be higher than that on the first day. In the same manner, the low, high, open and close on the third day should be higher than that on the second day for a true Three White Soldiers patterns to form on the charts.
Three consecutive bullish candles appearing in a downtrend is a pretty strong signal that the bulls are in control. This means that the downtrend will soon reverse and a new uptrend will start in the market. If you want to trade this pattern, always place the stop loss at the low of the second day so that you are on the safe side if the pattern fails.
Article Source: FxTradingStock.com
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by: Ahmad Hassam
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Date: Thu, 20 Jan 2011
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