The Complete Guide to Trading the Morning Doji Star & Evening Doji Star

Looking for a reliable candlestick reversal pattern?

Then let me introduce to you the Morning Doji Star and Evening Doji Star.

If you’re planning to go Long, then you want to use the Morning Doji Star as the entry trigger.

And if you’re planning to go Short, then you want to use the Evening Doji Star as the entry trigger.

While the Morning Doji Star and Evening Doji Star don’t appear as often as other more popular candlestick patterns like the Pin Bar…

When it does appear, there is usually a high probability that the trade will work out if you use it with the right trade setup.

So what are the right trade setups?

In this post, I will share with you what the Morning Doji Star and Evening Doji Star candlestick patterns are all about…

I’ll also share with you the psychology behind these two patterns and the reason why they are considered strong reversal signals…

And I’ll share with you the right setups to use with these two patterns so that you can trade them the right way.

Let’s begin.

What is a Morning Doji Star?

The Morning Doji Star is a bullish three-candlestick reversal pattern.

The first candlestick is usually a long bearish bar.

The second candlestick is a Doji where it opens and closes at around the same point.

Sometimes it has a small bullish body.

And sometimes it has a small bearish body.

The color doesn’t matter.

What matters is the formation of these three candlesticks.

The third candlestick is what defines it as a Morning Doji Star…

And that is that it has to close above the halfway mark of the first candlestick.

If it doesn’t close above the halfway mark of the first candlestick bar, then we can’t really consider it a Morning Doji Star.

And the reason is the psychology behind its close.

You see, if the market closes above the halfway mark of the first candlestick, this marks a majority in the rejection of the lows.

If you combine the three candlestick bars together, this is what you get:

You can see that when you combine the three candlesticks in the Morning Doji Star pattern, you get a Bullish Pin Bar!

The Bullish Pin Bar is a strong bullish candlestick pattern.

Hence this Morning Doji Star is a strong bullish reversal pattern when you find the right setup to trade with it.

Where to Find the Morning Doji Star

While the Morning Doji Star is a bullish candlestick reversal pattern, you can find it both in a downtrend and an uptrend.

The chart above shows a Morning Doji Star in an uptrend.

On the chart, I’ve also plotted two Exponential Moving Averages – the 20 EMA and 50 EMA.

You can see that the market has been trading above both the EMAs, then it did a pullback and went below both the EMAs.

The market then formed a Morning Doji Star pattern and the market subsequently went back up.

So a Morning Doji Star can appear in an uptrend from a pullback.

In a downtrend, the Morning Doji Star is normally formed with a bullish reversal chart pattern.

You can see in the chart above, the Morning Doji Star was formed together with the Double Bottom pattern,

The Double Bottom is a reversal chart pattern and when you find a Morning Doji Star at the second bottom, then it signifies a very strong bullish reversal signal.

What is an Evening Doji Star?

Now that you know what a Morning Doji Star is, the Evening Doji Star is simply the opposite.

It’s a bearish three-candlestick reversal pattern.

The first candlestick is usually a long bullish bar.

The second candlestick is a Doji where it opens and closes at around the same point.

Similar to the Morning Doji Star, sometimes it has a small bullish body and sometimes it has a small bearish body.

The color again doesn’t matter.

What matters is the formation of the three candlesticks.

The third candlestick is what defines it as an Evening Doji Star as it has to close below the halfway mark of the first candlestick.

If it doesn’t close below the halfway mark of the first candlestick bar, then we can’t really consider it an Evening Doji Star.

As you can see for both Doji Stars, the halfway mark of the first candlestick is pivotal in deciding the pattern’s formation.

And when you combine the three candlestick bars in the Evening Doji Star, you also get Pin Bar:

The diagram above shows that when you combine the three candlestick bars, it becomes a Bearish Pin Bar with a bullish body.

The Bearish Pin Bar is a strong bearish candlestick pattern.

Hence this Evening Doji Star is a strong bearish reversal pattern when you find the right setup to trade with it.

Where to Find the Evening Doji Star

Similar to the Morning Doji Star, you can find the Evening Doji Star in both an uptrend and a downtrend.

In an uptrend, an Evening Doji Star is usually a sign of a trend reversal.

In the chart above, you can see that the market has just started its uptrend forming higher highs and higher lows.

However, it quickly formed a Double Top and an Evening Doji Star is formed at the second “top”.

The Double Top on its own is a bearish reversal pattern.

Pair it with an Evening Doji Star and it can be a very strong bearish signal.

As you can see, the market started to tank pretty quickly after that.

In a downtrend, and Evening Doji Star can be a sign of a trend continuation.

In the chart above, you can see that the market has been in a downtrend forming lower lows and lower highs.

Then it did a pullback to above the 50 EMA and formed a Double Top as well.

At the second “top” of the Double Top, the Evening Doji Star formed.

From there, the market started to fall.

When combining the Evening Doji Star with a Double Top reversal pattern in a downtrend, it can be a very high probability trade.

How NOT to Trade the Morning Doji Star & Evening Doji Star

Before you can know how to trade both the Morning Doji Star and Evening Doji Star, it’s important to know when to avoid trading both of them.

While they are considered reversal candlestick patterns, what you don’t want to do is to trade them as a standalone.

And what I mean by that is to not trade it every time it appears on your chart.

When trading any candlestick pattern, you want to see the context for its formation.

That means whether there is any chart pattern that accompanies its formation…

Or whether there are any support or resistance levels that make sense for its formation.

As with any candlestick pattern, you only want to trade it with a trade setup.

Then use the candlestick pattern as the entry trigger.

Now that you know how not to trade these two Doji Stars, let’s get into how to trade it the right way.

How to Trade the Morning Doji Star

There are 3 ways to trade the Morning Doji Star candlestick pattern:

Trade it with a Double Bottom
Trade it with a V-Bottom
Trade it with a Divergence

Here are the details on each of them…

Double Bottom with Morning Doji Star

The Double Bottom is a bullish reversal chart pattern.

So when you combine it with the Morning Doji Star, it gives a good opportunity to go Long.

As you can see in this chart example that I’ve shown earlier, at the second bottom, there was a break below the previous swing low.

It then went above the previous swing low and went up a little before coming down again.

Then as it came down again, the market tried to test the previous swing low for a second time.

At that point, it formed a Morning Doji Star.

This signifies a rejection of the lows.

What’s significant to note is that the third bar in the Morning Doji Star pattern went above the high of the first candlestick and also closed above the body of the first candlestick.

This is a very strong sign that there is strong buying pressure at this point.

So we have a few things going on here…

First, we have the market testing the previous swing low and then closing above it.

This suggests that the previous swing low is a strong support level.

Second, we have the market come down to test that support level again but failed to close below it and subsequently formed a Morning Doji Star.

Third, we have the third candlestick in the Morning Doji Star pattern close above the first candlestick.

When you combine all these together, we have a confluence of bullish signals making this a strong bullish signal.

And as you can see, the market started to rally from there.

V-Bottom with Morning Doji Star

The next way to trade the Morning Doji Star is with a V-Bottom.

V-Bottoms are bullish reversal chart patterns that form a V-shape, hence its name.

It does not appear as often as the Double Bottom, and having a Morning Doji Star appear when it forms is even rarer.

So when it does form, it can be a very good trade opportunity.

However, we do not want to trade every V-Bottom that appears with a Morning Doji Star.

Instead, we only want to trade it if the V-Bottom is formed on a support level.

In the chart above, you can see that I’ve drawn a line where the previous swing low was at.

From the left-hand side of the chart, you can see that the market rallied up to around 0.9930…

Then it made a sharp move down to test the previous swing low.

It failed to closed below the previous swing low and formed a Morning Doji Star.

Now, if you noticed, this Morning Doji Star has two Dojis in the middle.

This is a valid Morning Doji Star as well because the second Doji is contained in the first Doji as an Inside Bar.

So that means if you combined both candlesticks, it would still be a Doji.

Hence I consider this a valid Morning Doji Star formation.

When the market formed the Morning Doji Star, this indicates that the previous swing low is holding up as a strong support level.

And as you can see, the market started to rally from that point on.

Divergence with Morning Doji Star

The last way to trade the Morning Doji Star is with bullish divergence.

To identify divergence, we use the Stochastic Oscillator indicator.

For a bullish divergence to happen, the market has to make a lower low, while the Stochastic Oscillator has to make a higher low.

And at the point where the market is making a lower low, we want to see a Morning Doji Star formed there.

From the left-hand side of the chart, you can see that the market is in a downtrend making lower lows and lower highs.

At the point of the lower low, it formed a Morning Doji Star.

This Morning Doji Star formation is a very significant one because the third candlestick in its formation broke below the low of the second candlestick and then closed above the high of the first candlestick.

That is a very bullish signal.

At the same time, the Stochastic oscillator is showing a higher low indicating a bullish divergence.

When you combine a bullish divergence with a Morning Doji Star, there’s a high probability that the trade will work out.

How to Trade the Evening Doji Star

Similar to the Morning Doji Star, there are 3 ways to trade the Evening Doji Star candlestick pattern:

Trade it with a Double Top
Trade it with a V-Top
Trade it with a Divergence

Here are the details on each of them…

Double Top with Evening Doji Star

The Double Top is a bearish reversal chart pattern.

Technical analysts would trade this pattern by going Short at its neckline.

However, when you trade this pattern with an Evening Doji Star, you can usually get an earlier entry compared to if you went Short at the break of the neckline.

In the chart above, you can see that an Evening Doji Star was formed at the second “top” of the Double Top.

If you went Short there, you would have gotten a much better entry compared to technical analysts who would only go Short at the neckline, which is around 0.9945.

By Shorting after the Evening Doji Star was formed, you would have gotten an earlier entry at around 0.9975.

That would be a 30-pips difference which can significantly alter the risk-to-reward ratio.

That means for the same Take Profit level, by entering at the Evening Doji Star, you would be able to get a bigger R-Multiple profit compared to if you entered at the break of the Double Top’s neckline.

V-Top with Evening Doji Star

The next way to trade the Evening Doji Star is with the V-Top.

The V-Top is the exact opposite of the V-Bottom.

That means to trade this pattern, we want the pattern and the Evening Doji Star to be formed at a resistance level.

In the chart above, you can see a rather small V-Top pattern formed where the Evening Doji Star was formed.

Now, this can also be considered a Double Top pattern if you include the first “top”.

But I regard this as a V-Top because there was a sharp move upwards and then a sharp move back down.

Regardless of whether it’s a Double Top or a V-Top, it is a valid reversal chart pattern.

So do not let the names of the chart formation stop you from entering into a good trade opportunity.

The price action here shows that it tested the previous swing high, and then it formed an Evening Doji Star.

So this is a valid Short trade.

Although the market went back up a little after the Evening Doji Star was formed…

It eventually went down hard as you can see on the chart.

Similar to the V-Bottom, the V-Top with an Evening Doji Star formation can be a rare occurrence.

So if you do see it on the charts, you don’t want to miss the opportunity to trade it if there is a valid resistance level at its formation.

Divergence with Evening Doji Star

Finally, the last way to trade the Evening Doji Star is with a bearish divergence.

For a divergence on the Morning Doji Star…

We are looking for the market to form a lower low but the Stochastic Oscillator to form a higher low.

But for a divergence on the Evening Doji Star…

We are looking for the market to form a higher high but the Stochastic oscillator to form a lower high.

In the chart above, you can see that the market has started its uptrend as it moved above both the 20 EMA and 50 EMA, and formed higher highs and higher lows.

At the last higher high of the upward move, the market formed an Evening Doji Star.

This Evening Doji Star is a very bearish formation as the third candlestick in its formation closed below the low of the first candlestick.

At the same time, the market showed a bearish divergence with a distinct lower high.

From there, the market eventually reversed and started its downtrend.

Conclusion

While both the Morning Star Doji and Evening Doji Star don’t happen that often compared to many other candlestick patterns…

When it does appear, it can usually provides a very good opportunity to get into a trade…

If the trade setup is right.

Remember, we never want to trade both of them as a standalone pattern.

Instead, you only want to trade it when it forms as part of either of the trade setups I’ve shared in this post.

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The Complete Guide to Trading the Morning Doji Star & Evening Doji Star

The Complete Guide to Trading the Morning Doji Star & Evening Doji Star