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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's Morning Doji Star

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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 10/30/2014
17,195 221.11 1.3%
8,631 -83.83 -1.0%
596 12.24 2.1%
4,566 16.91 0.4%
1,995 12.35 0.6%
YTD
3.7%
16.6%
21.6%
9.3%
7.9%
Tom's Targets    Overview: 10/30/2014
17,500 or 16,700 by 11/15/2014
8,850 or 8,200 by 11/15/2014
600 or 560 by 11/15/2014
4,600 or 4,200 by 11/15/2014
2,000 or 1,900 by 11/15/2014

Written and copyright © 2008-2014 by Thomas N. Bulkowski. All rights reserved.

In my book, Encyclopedia of Candlestick Charts, pictured on the right, I explore the entire range of candlestick patterns from abandoned babies to windows (not exactly A to Z, but you get the idea), in both bull and bear markets, using almost 5 million candle lines in the tests.

The book takes an in-depth look at 103 candlestick patterns and reports on behavior and rank (3 types: reversal rate, frequency, and overall performance), identification guidelines, performance statistics (tables of general statistics, height, and volume), trading tactics (tables of statistics on reversal rates and performance indicators), and wraps each chapter with a sample trade. I share a sliver of that information below. If you like what you read here, then you will love the book. Help support this website and buy a copy by clicking on the above link.

The morning doji star acts as a bullish reversal the vast majority of the time, but it is somewhat rare. The overall performance is quite good, so expect the trend to hold up.

Taking a microscope to the performance numbers shows that downward breakouts outperform upward ones both in the 10-day performance rank and by the average move 10 days after the breakout. If you remove the 10-day restriction and just measure the move to the trend end, you will find that downward breakouts in a bull market are the weak performers, but in a bear market, they are the strongest performers.

Morning Doji Star Important Results

Theoretical performance: Bullish reversal
Tested performance: Bullish reversal 76% of the time
Frequency rank: 78
Overall performance rank: 25
Best percentage meeting price target: 49% (bull market, up breakout)
Best average move in 10 days: -6.25% (bear market, down breakout)
Best 10-day performance rank: 15 (bear market, down breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal morning doji star candlestick
Morning Doji Star
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Morning Doji Star Discussion

The morning doji star is supposed to act as a bullish reversal and it does 76% of the time, confirmed by testing 932 examples. That is well short of the 20,000 that I usually like to dissect. The bear market samples are few (33 for bear market/down breakouts), so view those results with skepticism. The frequency rank of 78 is a good hint at the scarcity of the morning doji star.

The overall performance rank is 25th, which is quite good. The best move 10 days after the breakout is a drop of 6.25% in a bear market. That performance ranks 15th. I consider moves of 6% or higher to be good ones, so the morning doji star does well.

Morning Doji Star Identification Guidelines

CharacteristicDiscussion
Number of candle linesThree.
Price trend leading to the patternDownward
ConfigurationLook for a tall black candle in a downward price trend. The next day, a doji appears and its body gaps below the prior candle's body. The final day is a tall white candle whose body gaps above the doji's.
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Three Trading Tidbits for Morning Doji Star

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. Morning doji star candles that appear within a third of the yearly high tend to act as reversals most often -- page 594-595.
  2. Select tall candles for the best performance in most markets -- page 591-592.
  3. Volume gives performance clues -- page 593.

Morning Doji Star Example

The morning doji star candlestick on the daily scale

The chart shows a morning doji star circled in red on the daily scale. In a downward price trend, a tall black candle appears followed by a doji. After the doji, a tall white candle points the way higher. The body of the doji must gap below the two adjacent bodies, and it does in this example.

The breakout from this morning doji star candle pattern is upward. An upward breakout occurs when price closes above the top of the candle. Since price trends downward into the morning doji star and exits upward, the candle acts as a reversal of the downtrend.

Shown is not necessarily the best setup for the morning doji star. I have found that the best setups are those in which the primary trend is upward and the morning doji star appears as part of a downward retrace in that upward trend. When price breaks out upward, it joins with the uptrend already in existence and away it goes.

-- Thomas Bulkowski

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Other Morning Doji Star Examples

See Also

Copyright © 2008-2014 by Thomas N. Bulkowski. All rights reserved. 2+2=5 for extremely large values of 2.