This is a three-candlestick formation signaling a major bottom reversal. It consists of a long black candlestick followed by a doji, which characteristically gaps down to form a doji star. Then they have a third white candlestick whose closing is well in to the first session’s black actual body. This is a significant bottom pattern.
Acknowledging Criteria:
1. Market is characterized by downtrend.
2. We see a long black candlestick in the first day.
3. Then we see a Doji on the second day that gaps in the direction of the previous downtrend.
4. The white candlestick on the third day confirms the reversal.
Explanation:
Black real body while market is falling down may suggest that the bears are in command. Then a Doji appears showing the diminishing capacity of sellers to drive the market lower. Confirmation of bull ascendancy is the third day’s strong white real body. An ideal Bullish Morning Doji Star Pattern must have a gap before and after the middle line’s real body. The second gap is rare, but lack of it does not take away from the power of this formation.
Important Factors:
The Doji may be more than one, two or even three.
Doji’s 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.