The Morning Star: A Powerful Candlestick Reversal Signal

When financial information appears to be negative, why is the market going up? When every- thing appears to be positive, why does the market go down? Monday's trading November 28, 2100, saw the Dow soaring even in the throes of bad news still coming from the European Banking system.

The Japanese traders say "Let the market tell you what the market is going to do." The utilization of candlestick signals makes analyzing the direction of the markets and trends relatively easy. It becomes difficult at times to sort out what the market intentions are when listening to the many scenarios from the so-called “market experts.” Watching the financial news stations will always provide a multitude of opinions of where the market is going. Using Japanese candlesticks signals will circumvent all that noise. The signals help decipher the difference between what the experts think the market should be doing and what the market is actually doing.

The one basic factor built into Japanese candlesticks signals is that they are formed by the cumulative knowledge of all the investor input, the buying and selling, of a trading entity or trading entities, during a certain time period. No matter what you hear elsewhere, the candlestick signals tell you exactly what investor sentiment is doing.

The Morning Star signal is one of the most clear, symmetrical candlestick reversal patterns. Not to overstate the obvious, but if Candlestick signals didn't work, we would not be looking at them today. The Japanese rice traders that used candlestick signals became enormously wealthy. The visual aspect of candlestick signals are the identifying features that a reversal is about to occur. Somebody else has already made decisions that it is time to buy or sell. The Morning Star signal, when fully analyzed, reveals very simple common sense features that identify the change in investor sentiment.

The Morning Star signal:

The Japanese rice traders described it as the planet Mercury, the morning star. It foretells that brighter things, sunrise, is about to occur, meaning that prices are going to go higher. It is formed after an obvious downtrend. The three day signal consists of a long black body, usually one produced of the fear induced at the bottom of a long decline. The following day reveals indecisive trading, the magnitude of the trading range remains small for the day. The third day is a white candle day. The white candle represents the fact that the bulls have now stepped in and seized control.

Candlestick analysis is not rocket science. It is simple investment philosophy's put into a visual graphic. The 400 years of actual investment results from Japanese rice traders have provided high probability signal results. The candlestick signals illustrate the investor sentiment mostly defined as fear and greed. Human emotion, when it comes to investing funds, will always have the same ingredients. The candlestick signals are simply the graphic depiction of investor sentiment.

Candlestick signals were not discovered and tested by computer back testing simulations. Candlestick signals are the result of centuries of analyzing how human emotions effect a price trend. The signals occurring over and over at specific points in a trend-reversaI provide a statistically proven trading platform. If you understand how they are formed, you'll understand what makes prices move.

Stephen W. Bigalow is author of “Profitable Candlestick Investing”, “High Profit Candlestick Patterns” and “Candlestick Profits” is also principal of the www.candlestickforum.com, the leading website on the Internet for providing information and educational material about Japanese Candlestick investing. Over 28 years of extensive study and utilization of candlestick analysis has produced an array of easy-to-learn educational material about Candlesticks. As one of the leading Candlestick experts in the nation, Mr. Bigalow, through consulting with major trading firms, has developed multiple successful trading programs from the day-trader to the long-term hold investor.