The Morning Doji Star candlestick pattern is a favorite among pattern traders. Not to be confused with the similar Morning Star pattern, this three candle pattern formation is a bullish reversal pattern with a solid history of performing well.
Like the Morning Star pattern, the first candle is a large full bodied bearish candle.
The second candle is a Doji candlestick that gaps down below the body of the first candle.
The third and final candle is a large bullish candle that should gap up and close at least into the halfway point of the first candle’s body. If the third candle completely engulfs the first candle then it is still a valid Morning Doji Star pattern signal.
The Morning Doji Star candlestick pattern is very reliable with a 76% accuracy rate, but it can be hard to find on larger time frames. Use volume and divergence indicators to find clues on if this pattern will turn into a breakout.
Also keep in mind that taller candles tend to outperform their smaller counterparts.