Bullish Candlestick Pattern: “Morning Star” is shining on…

$AAPL.

I got stopped out earlier in the morning during the downdraft but re-entered my position on $AAPL after the dust was settled; therefore I’m still long $AAPL.  If the Morning Star bullish pattern continues to hold until day close, we “may” find the bottom on $AAPL.

Take a look at the Morning Star pattern (inside the circle).

AAPL_daily

Of course, $AAPL earning report after close tomorrow will be the deciding point of $AAPL’s future direction.

Below is the primer on Morning Star Candlestick pattern:

Morning Star

The morning star consists of three candlesticks:

  1. A long black candlestick.
  2. A small white or black candlestick that gaps below the close of the previous candlestick. This candlestick can also be a doji, in which case the pattern would be a morning doji star.
  3. A long white candlestick.

The black candlestick confirms that the decline remains in force and selling dominates. When the second candlestick gaps down, it provides further evidence of selling pressure. However, the decline ceases or slows significantly after the gap and a small candlestick forms. The small candlestick indicates indecision and a possible reversal of trend. If the small candlestick is a doji, the chances of a reversal increase. The third long white candlestick provides bullish confirmation of the reversal.

Broadcom Corp. (BRCM) Candlestick Morning Doji Star example chart from StockCharts.com

After declining from above 180 to below 120, Broadcom (BRCM)[Brcm] formed a morning doji star and subsequently advanced above 160 in the next three days. These are strong reversal patterns and do not require further bullish confirmation, beyond the long white candlestick on the third day. After the advance above 160, a two-week pullback followed and the stock formed a piecing pattern (red arrow) that was confirmed with a large gap up.

My 2 cents.



Categories: AAPL, Bullish Candlestick Pattern, Morning Star

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