• Direction: Bullish
• Type: Reversal
• Reliability: Moderate
• The first day is long red day
• Second day is a doji that opens at the previous day close
• The doji wicks should not be long
The Doji Star formation starts as the bear market continues with a strong red day. The second day however trades within a small range and closes at or near its open. This small range suggests uncertainty in the market, and in fact candlestick analysts consider the smaller the doji the better for strength of signal. This is taken as a sign that sellers are losing control, bearish momentum is weakening and buyers are regaining control.
For strong confirmation of trend reversal, watch for a blue day with a higher close on the third trading day. Such a formation on the third day would be the strong Bullish Abandoned Baby or Morning Star Doji.
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