Bullish Doji Star Pattern

by · December 31, 2009

BULLISH DOJI STAR PATTERN (BDSP)
the bulls and the bears are in equilibrium

Characteristics:
1. Market is on a downtrend;
2. Day 1 has a long black body;
3. On Day 2, we see a short body, a spinning top, a highwave or a Doji, that gaps in the direction of the prior trend on Day 3;
4. The shadows of this Day 2 “body” are not long.

Brief Explanation:
Usually, a star following a long black stick during a downtrend shows a change in market environment. The bears are in control here. But a change is implied by the appearance of a star. This means that the bulls and bears are in a state of equilibrium. The downward direction is now fizzling out. The continuation of the bear market is not favorable.

Note:
1. A confirmation of the reversal on Day 3 is necessary (through a white stick, a large gap up or a higher close).