Thursday, June 18, 2009

SLB


According to Investopedia:

Morning Star is a bullish candlestick pattern that consists of three candles that have demonstrated the following characteristics:

1. The first bar is a large red candlestick located within a defined downtrend.
2. The second bar is a small-bodied candle (either red or white) that closes below the first red bar.
3. The last bar is a large white candle that opens above the middle candle and closes near the center of the first bar's body.

Edited to add:

According to Steve Nison: The real body of the second bar should not overlap with the real body of the first red bar.

(Thanks to Jamie for pointing out this important point)

SLB found support at PDL in the morning and formed 2 nice hammers, moved up but was rejected by the 50EMA and moved down again to find support at PDL. It then formed a NRB. The next bar took out the high of the NRB. My entry was above the high of the NRB (6th candle). The 7th candle met the first 2 requirements of morning star but did not close near the center of the 5th bar's body. Took 3/4th off at daily pivot and 20 EMA and the rest a little below PDH.

** Since SLB does not meet the important requirement, it is not a morning star reversal pattern. I am removing the term 'Morning Star Reversal' from the title to avoid confusion.

2 comments:

TJ said...

Steve Nison also notes that the real bodies of the first and second sticks should not overlap on a morning star reversal pattern.

Day Tradr said...

Thanks Jamie for pointing out the important criteria.