Doji is a particular case of the Star candlestick. Opening and closing prices of Doji candlesticks almost equal to each other. Morning and Evening Doji, in turn, are the particular case of the Morning and Evening Star reversal patterns.
Doji Star is a confirmation of the reversal at the high in an upward trend, followed by a long black body, covering a significant part of the white body. Such a formation is called an Evening Doji Star Candlestick Pattern. The Evening Doji Star is a particular case of standard Evening Star pattern. The Star in a normal Evening Star is a candlestick with a small body (the second candle in the formation); the Star in Evening Doji Star is Doji.
It is important to note the following: if right after the Doji Star appears the rising candle, which forms the price gap up, Doji ceases to be a bearish signal; If on a downtrend, Doji appears after the candle with the black body (a downward candle), the white candle (the rising candle) is a confirmation of the reversal at the low.
If on the uptrend Doji Star forms the price gap up (the shadows of the candles do not intersect) and followed by black candle with price gap down (shadows also do not intersect), then this star called Abandoned Baby Top. This formation is one of the strongest reversal signals; it is very rare.
The same holds true in mirror image, for downward trends. In particular, if a Doji Star appears with a gap before and after it (when the shadows do not intersect), it is likely that the market has reached the bottom line, such formation has a name Abandoned Baby Bottom. It is also are extremely rarely.
In today’s markets, it is possible to interpret the formations with Doji candlesticks even in the absence of gaps. The gaps between the candles, because of the huge number of market players are much rarer than during the creation of the theory of Japanese Candlesticks.
Evening Doji Star Pattern
Morning Doji Star Pattern
The body of white candle covers a significant part of the black candle body. This formation of three candles is called the Morning Doji Star. This type of the Morning Star Pattern is a paramount signal of a reversal of the downtrend. If on the downward trend followed by the Doji appears the black body, which forms the price gap down, Doji Star ceases to be a bullish signal; this explains why in the case of appearance of Doji Star it is important to wait for a confirmation signal within one to two trading periods.
The psychology of both patterns is interpreted in the same way as their predecessors – the Morning Star and Evening Star. The only difference between them is the second star, which in these patterns is the Doji candle. The formation of the Doji Star has a strong psychological impact on traders and increases the probability of a reversal. However, it is always good to wait for confirmation of such a signal.