ZLBT Chats

Wednesday, November 10, 2010

FKLI 15 minutes >>> A Star Performance?

FKLI & The Starry Doji

The Tri Star Pattern is a very rare but significant reversal pattern. It is formed by three Dojis. The middle Doji is a Doji Star.

Recognition Criteria:
1. Market is characterized by uptrend or downtrend.
2. We see three Dojis on three consecutive candles.
3. The second Doji candle has a gap above the first and third.

The Bearish or Bullish Tri Star Pattern appears in a market characterized by an uptrend or downtrend for a specific period.

Normally this TRI-STAR pattern applies to daily Japanese Candlesticks chart. ZLBT's example is a 15 minutes timeframe so be prepared for some whipsaws. Just remember (always) there is NO PERFECTIONS in technical analysis.

When the trend starts to show weakness, we see smaller real bodies. The first Doji is already a matter for considerations. The second Doji shows that market now lost its direction whereby the buyers & sellers are evenly matched. Finally, the third Doji announces the end of the immediate trend since this now shows utmost indecision leading to reversal of the positions.

Important Factors:
A confirmation on the fourth (in this case >>> 5th) candle is required to show that the trend has reversed. This may be in the form of a bullish candlestick, a large gap up or an upper close on the confirmation candle.


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