Doji Star - reversal candlestick pattern

Candlestick model Dodge Star is a warning that the current trend is close to a reversal. In order to state the appearance of this price pattern, it is necessary to form a candle with a long body, the color of which reflects the current trend. Further, the next day the opening and closing prices should be equal. Such weakening for the current trend is a cause for concern. A perfectly defined doji star signal is an excellent example of the use of the Japanese candlestick chart method. The signal would not have been as clear if we had used a different method of graphical analysis.

Figure 1. Graphical example of bearish and bullish Doji stars

Rules for the formation of the Dodge star model

Let's summarize the above:

1. The first day is a long day.
2. The second day is Dodgy.
3. Shadows of Dodgy should not be too long, especially in a bull case.

If we're talking about the Dodge Bear StarThe situation unfolds as follows: first, the market is dominated by the upward trendand this is confirmed by a strong white daily candlestick; the next day the trade is in a narrow price corridor, and the session closes at the same level where it opened, or very close to it. This almost completely undermines traders' confidence in the previous rise. Many positions will be reversed, which generates a Doji candle. You can also add that if the next day's closing price is below the level of the Star-DodgeIf it is not, it will clear the way for a trend reversal by confirming the signal.

Nuances of identifying the Star-Dodge candlestick pattern

Very often after the close of the first day in the main trend and before the formation of the Dodge Star a price break occurs. If the gap also captures the shadows, the importance of trend reversal is even higher. The color of the first day in this case should reflect the direction of the trend. The proportions of the shadow and the body do not play a role: the day can be volatileand so the shadows can be long, but, still, the main thing is the equality of the opening and closing candle.

Example of formation of a candlestick pattern Star-Dodge

Figure 2. An example of the formation of this candlestick pattern on the price chart.

Perhaps one of the brightest examples of Dodgy star candlestick pattern formation with a change in the direction of the price movement. After a long rise, the price traded in a narrow range, with the opening and closing points of the trading day being equal. Next candle was bearish, which gives a good reason to identify the reversal of the movement. Subsequently, the course of the price movement confirmed these conclusions.

You can see in the figure the formation of another Dodge star before the turnaround and the candlestick pattern we studied. After this Doji pattern, the price continued to update the highs, so we did not make a trade. But this first Dodge star model gave us a clear signal on the probability and proximity of a trend change.