Investor's wiki

Star

Star

What Is a Star?

A star is a type of candlestick formation that is distinguished when a small-bodied candle is positioned over the price scope of the previous candle because of a gap in the underlying asset price.

A star is one of the four categories (quadrants) of the BCG growth-share matrix that addresses the division inside a company that has a large market share in a quickly extending industry.

Grasping Stars

Small-bodied candles in the star position frequently recommend that market participants are becoming uncertain and that the strength of the current trend could turn around. For a substantial star pattern, most traders will look for small-bodied candles to follow a large-bodied candle since this setup generally prompts a higher likelihood of a true trend reversal than when the body of the principal candle is small.

A star requires investment capital to extend constantly inside a quickly developing industry, in this manner keeping up with its advantage. Should the industry mature with the star positioned as a leader, the star will transform into a cash cow.

Stars are visually recognized patterns and not technical. Trading simply on visual patterns can be a hazardous proposition. A morning star is best when it is backed up by volume and some other indicator like a support level. In any case, it is extremely simple to see morning stars forming at whatever point a small candle springs up in a downtrend.

Morning Star versus Evening Star

A morning star is a visual pattern comprising of three candlesticks that are deciphered as a bullish sign by technical analysts. A morning star forms following a downward trend and it demonstrates the start of a vertical trip. It is an indication of a reversal in the previous price trend. Traders watch for the formation of a morning star and afterward look for confirmation that a reversal is for sure happening utilizing extra indicators.

Something contrary to a morning star is, of course, an evening star. The evening star is a long white candle followed by a short black or white one and afterward a long black one that goes down half the length of the white candle in the main session. The evening star flags a reversal of an uptrend with the bulls giving way to the bears. The gap between the real bodies of the two candlesticks makes a spinning top a star.

The star can likewise form inside the upper shadow of the main candlestick. The star is the main indication of weakness, as it shows that purchasers couldn't push the price up. This weakness is confirmed by the candlestick that follows the star. This candlestick must be a dark candlestick that closes all the way into the body of the primary candlestick.

Highlights

  • A morning star is a visual pattern comprised of a tall black candlestick, a smaller black or white candlestick with a short body and long wicks, and a third tall white candlestick.
  • A star is a candlestick pattern portrayed by a small-bodied candled showing up over the high of the previous candle.
  • The contrary pattern to a morning star is the evening star, which flags a reversal of an uptrend into a downtrend.