Bearish Doji Star Candlestick
The first day is long blue day
Second day is a doji that opens at the previous days close
The doji wicks should not be long
The Doji Star formation starts as the bull market continues with a strong blue day. The second day however, trades within a small range and closes at or near its open, implying the sellers and buyers are in deadlock. This is taken as a sign that buyers are losing control and bullish momentum is weakening.
For strong confirmation of trend reversal, watch for a red day with a lower close on the third trading day. Such a formation on the third day would be the strong Bearish Abandoned Baby or Evening Doji Star.
In non-FX markets that do not track price 24 hours, traders watching for added signals of strength in this formation would look for a gap to take place on the second day, as the Doji Star open above the previous days close (see equity chart above). Such a gap of course is not possible in the Forex Market, unrestrained by artificial exchange hours.
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