Steve Nisson describes a morning star pattern as follows:
“Candle 1. An extended black real body. This pictorially proves the bears are in command.
Candle 2. A small real body that doesn’t touch the prior real body. The small real body means sellers are losing the capacity to drive the market lower. [In the DJIA Kevi posted the small real body is a doji.]
Candle 3. The concluding candle is a white (green) real body that intrudes deeply into the first session’s black (red) candle. This is the indication that the bulls have seized control.
The lowest low of the three lines that form this pattern should form a support line.
An ideal morning star would have a gap between the second and third real bodies. From my experience, a lack of a gap does not seem to weaken the power of this formation. The decisive factor is that the second candle should be a spinning top [a doji fits this criteria] and the third candle pushes well into the black candle.”
On this analysis the DJIA has formed a morning star which of course is a bullish sign, although it would have been nicer if the third green candle has closed a bit higher.
Result – the DJIA is going to go up ( and if it doesn’t it will go sideways or down – because in the end anything can happen)!!
