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Abandoned Baby
Belt Hold
Breakaway
Concealing Baby Swallow
Doji Star
Dragonfly Doji
Engulfing
Gravestone Doji
Hammer
Harami
Harami Cross
Homing Pigeon
Inverted Hammer
Kicking
Ladder Bottom
Mat Hold
Matching Low
Meeting Lines
Morning Doji Star
Morning Star
Piercing Line
Rising Three Methods
Separating Lines
Side by Side White Lines
Stick Sandwich
Three Inside Up
Three Line Strike
Three Outside Up
Three Stars In the South
Three While Soldiers
Tri Star
Unique Three River Bottom
Upside Gap Three Methods
Upside Tasuki Gap

Morning Star
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Pattern: reversal
Reliability: high

Identification
A long black day is followed by a small day that gaps in the direction of the trend. The third day is a white day which closes in the top half of the black day.

The Psychology
In a downtrend or during a pullback within an uptrend, the market gaps down but enough buyers step in to halt the weakness. The lack of ability of the bears to press the issue indicates the downtrend may be weakening. The gap up and rally that closes the white day above the top half of the black day confirms the reversal if accomplished with a surge in volume.

The bullish Morning Star is similar to the bullish Morning Doji Star, bullish Abandoned Baby, and bullish Doji Star and could be a continuation of the bullish Inverted Hammer.



Here is a great example of an ideal entry place with a Morning Star formation. ASML was in a steady uptrend when the stock fell back to a longer term support trendline in late June. The bullish Morning Star pattern presented a low risk/high reward setup just the same as the bullish Engulfing pattern on May 27 offered.



A bullish Morning Star formation also presented a good entry with DRCO. The stock was in a nice uptrend when it established and then bounced off support in June. These candlestick patterns don't always work, but if you patiently wait for your ideal entries, the odds significantly shift in your favor.


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