A New Candlestick Pattern Just Rode Into Town
Tuesday, July 14, 2009 | William Kurtz Is this Spam?Everyone who is familiar with Japanese Candlesticks knows about the “Morning Star,” because it is one of the most familiar bullish reversal patterns. A variant of the Morning Star set off the Great Rally of 2009. When we see it appear, we await expectantly for good things to happen.
Here are the distinguishing characteristics of the Morning Star: It is composed of three price bars. The first of the three will be a tall black candle, which describes a substantial “down” day (assuming that we are working with a Daily chart). The middle bar, the “Star,” will show a small “real body,” the price area between the opening price and the closing price, and the real body will be below or near the low price of the tall black candle. The third bar will be a tall white candle, denoting a strong “up” day and a reversal of trend. The Morning Star is universally considered to be bullish.
There is a variant of the Morning Star which contains two Stars between the tall black candle and the tall white candle. It, too, appears to have at least some bullish characteristics. If it is true that “the proof is in the pudding,” then this variant is indeed powerful, because it is the one which ignited the Rally of 2009. We call it the “Tokyo Express.”
Now it seems at least possible that there is another variant of the Morning Star, about which we have not seen anything in writing. This one contains the tall black bar and the tall white bar; but instead of a single small Star in between them, or even two Stars, this one has three.
We see it today in the Dow Industrials and in the S&P 500. The latter is probably the better, or best, example. We do indeed see the tall black bar as the first bar and the tall white bar as the final bar; but there are three Stars in between them; and today (the day following completion of the pattern) prices are up nicely.
So perhaps the door is not closed to the identification of new Candlestick patterns. This one appears to be off to a good start. Only time will tell whether its present bullish promise bears fruit.
We ought to give it a name, just in case it turns out to be real. My suggestion for it is “Kobe Cruiser.”
William Kurtz
July 14. 2009
http://www.candelaabra.com
