Candlesticks Chpt-5 Stars Flashcards
A star is ___________
a small real body, any color, that gaps away from the large real body preceding it. The real bodies do NOT overlap. But the shadows can.
If the star is a doji instead of a small real body, it is called a _____________.
doji star
The star, especially the doji star, is a warning that ___________________.
the prior trend may be ending.
The star’s small real body represents a _____________between the bulls and bears. The bulls are obviously in charge in a briskly ascending market. A star is a signal of a deadlock between the buying and selling forces. This deadlock may have occurred either because of a change in the ____________force or a change in the ____________pressure. Either way, the star tells us the rally’s prior power has slightly dissipated.
Stalemate
Buying
Selling
The star is part of four reversal patterns including:
- the morning star;
- the evening star;
- the doji stars; and
- the shooting star.
The morning star is a ______________________pattern. Its name is derived because, like the morning star (the nickname for the planet Mercury) that foretells the sunrise, it presages _________________.
Bottom reversal pattern.
Rising prices
There are three candle lines comprising morning star pattern:
Candle 1. An extended black real body. This pictorially proves that the bears are in command.
Candle 2. A small real body that doesn’t touch the prior real body (these two lines comprise a basic star pattern). The small real body means sellers are losing the capacity to drive the market lower.
Candle 3. The concluding candle of the morning star is a white real body that intrudes deeply into the first session’s black candle.
This is the indication that the bulls have seized control.
An ideal morning star would have a gap between ___________________ real bodies.
From my experience, a lack of a gap does not seem to weaken the power of this formation.
the second and third
The decisive factor is that the second candle should be a spinning top and the third candle pushes well into the black candle.
If the third bar of the star pattern is large the completion of the morning star may not present an attractive risk/ reward trading opportunity. An option is ____________________.
waiting for a correction to the morning star’s support area to start nibbling from the long side.
While the ideal morning and evening stars should have none of their three real bodies touching, there is even more flexibility to the definition of the morning star (and also the evening star) in markets ________________________________________.
where the open and close are either the same or close to one another. This would include: Foreign exchange markets where there is no official open and close. Many indexes such as the Semi-Conductor or Drug Indexes. Intraday charts. For instance, on a 15-minute chart the open of a 15-minute session is usually not much different from the close of the prior 15-minute session.
The ______________ is the bearish counterpart of the morning star pattern.
The evening star
Three lines compose the evening star. The first is a _______________ real body, the next is a ______________ . It is the first hint of a top. The third line corroborates a top and completes the three-line pattern of the evening star. The third line is a that closes sharply into the first period’s white real body.
long green
star
Red real body
You can compare the evening star pattern to a traffic light. The traffic light goes from green (the bullish green real body) to yellow (the star’s warning signal) to red (the red real body confirming that ______________________).
the prior trend has stopped
In principle, an evening star should have a gap between the first and second real bodies and then another gap between the second and third real bodies. But, as detailed earlier in the section on the morning star, this second gap is ______________ and __________________.
The main concern should be _____________________ of the third day’s red real body into the first day’s green real body.
rarely seen
and
is not necessary for the success of this pattern.
the extent of the intrusion
3 factors increasing the likelihood that an evening or morning star could be a reversal would include:
- If there is no overlap among the first, second, and third real bodies.
- If the third candle closes deeply into the first candle’s real body.
- If there is light volume on the first candle session and heavy volume on the third candle session.
This would show a reduction of the force for the prior trend and an increase in the direction force of the new trend.
