The morning star,
that on the first day there is a large dark candle. The middle day is not a perfect
star, because there is a small lower shadow, but the upper shadow on top of a small real body gives it
a star quality. The third candle is a large white candle that completes the reversal. Not how the third
candle recovered nearly to the highs of the first day and occurred on strong volume.
In order for the Morning Star signal to be valid, the following conditions must exist:
•
The stock must have been in a definite downtrend before this signal occurs. This can be
visually seen on the chart.
•
The first day of the signal must be a long dark body. The
second day must be a day of
indecision. The third day should be a long white candle reaching at least halfway into the body
of the first day’s dark candle.
For example = VIBHA
The shooting star
can appear only at a potential market top. If a shooting star occurs after a candle
with
a large real body, typically it is that much stronger a warning because
it shows that the price
cannot sustain high levels. The day the shooting star occurs, the market ideally should gap higher . The
stock should then rally sharply. At this point, it appears as though the longs are in complete control.
Sometime during the day, however, profit taking ensues. The stock closes near the unchanged market,
as shown by a small real body. Therefore a shooting star has a small
real body and a large upper
shadow. Typically, there will be either no lower shadow or a very small one.
In order for the Shooting Star signal to be valid, the following conditions must exist:
•
The stock must have been in a definite uptrend before this signal occurs. This can be visually
seen on the chart.
•
The Upper shadow must be at least twice the size of the body.
•
The day after the Shooting Star is formed, one should witness continued selling.
•
There should be no lower shadow or a very small lower shadow. The colour of the body does
not matter, but a black
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