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To evaluate the performance of the pattern in your stock exchange within the context of other global markets, please refer to the table below. Locate your stock market to see its ranking among others. This will provide insights into the pattern’s strength and reliability, aiding you in your buying and selling decisions.
BULLISH DOJI STAR
Definition
This pattern emerges in a downtrend and signals a potential trend reversal. It comprises a black candlestick followed by a Doji that gaps downward at the opening. When the Doji resembles an Umbrella, it is termed a "Bullish Dragonfly Doji". Conversely, if it takes the form of an Inverted Umbrella, it is called a "Bullish Gravestone Doji". Collectively, these patterns are referred to as a "Bullish Doji Star", irrespective of the Doji’s shape.
Recognition Criteria
1. The market is currently defined by a dominant downward trend.
2. On the first day, a black candlestick is observed.
3. Then we see a Doji on the second day that gaps down.
Pattern Requirements and Flexibility
The Bullish Doji Star pattern should begin with a normal or long black candlestick. This must be followed by a Doji that gaps downward.
Trader’s Behavior
The market is in a downtrend, confirmed by a strong black candlestick. The next day, the market opens lower with a gap down and trades within a narrow range. The day closes at the opening price, forming a Doji. While bears were in control during the downtrend, the appearance of a Doji Star implies a shift, indicating equilibrium between bulls and bears. The bearish momentum is waning, suggesting unfavorable conditions for the continuation of the bear market.
Buy/Stop-Loss Levels
The confirmation level is set at the midpoint of the gap between the Doji and the preceding candlestick. For confirmation, prices must exceed this level.
The stop-loss level is set at the lower of the last two lows. After a BUY signal, the stop-loss is triggered if prices decline instead of rising and either close below the stop-loss level or record two consecutive daily lows below it, without any bearish pattern being detected.