CDL_DOJISTAR (Doji Star Candlestick Pattern)

Overview

The Doji Star is a two or three-candle reversal pattern that combines the indecision of a Doji with gap characteristics. When a Doji forms after a gap following a strong trend, it signals potential exhaustion and reversal. The pattern is particularly powerful when the Doji gaps away from the previous candle's body, creating a "star" appearance that indicates a dramatic shift in market sentiment and momentum.

Parameters

Parameter	Type	Default	Description
open	Array	Required	Array of opening prices for each period
high	Array	Required	Array of high prices for each period
low	Array	Required	Array of low prices for each period
close	Array	Required	Array of closing prices for each period

Parameter Details

open, high, low, close (OHLC Data) - All four price arrays must be of equal length - Each index represents the same time period across all arrays - Prices should be in chronological order (oldest to newest) - Minimum of 2 periods required to detect the pattern - The pattern analyzes the relationship between consecutive candles to identify Doji Star formations

Usage

Basic Usage

require 'sqa/tai'

open  = [100.0, 105.0, 106.0, 107.0, 108.0]
high  = [101.0, 106.0, 106.5, 108.0, 109.0]
low   = [99.0, 104.5, 105.5, 106.5, 107.5]
close = [105.0, 105.5, 106.0, 107.5, 108.5]

# Detect Doji Star patterns
doji_star = SQA::TAI.cdl_dojistar(open, high, low, close)

if doji_star.last != 0
  puts "Doji Star detected!"
  if doji_star.last == 100
    puts "Bullish Doji Star - potential upward reversal"
  else
    puts "Bearish Doji Star - potential downward reversal"
  end
end

With Trend Context

open, high, low, close = load_ohlc_data('AAPL')

doji_star = SQA::TAI.cdl_dojistar(open, high, low, close)
sma_20 = SQA::TAI.sma(close, period: 20)
rsi = SQA::TAI.rsi(close, period: 14)

if doji_star.last == 100
  # Bullish Doji Star
  if close[-3] < sma_20[-3] && rsi.last < 40
    puts "Bullish Doji Star in downtrend - Strong reversal signal"
    puts "Gap up opening: #{open[-1]} vs prior close: #{close[-2]}"
  end
elsif doji_star.last == -100
  # Bearish Doji Star
  if close[-3] > sma_20[-3] && rsi.last > 60
    puts "Bearish Doji Star in uptrend - Strong reversal signal"
    puts "Gap down opening: #{open[-1]} vs prior close: #{close[-2]}"
  end
end

Understanding the Pattern

What It Measures

The Doji Star measures critical turning points where market momentum has shifted dramatically. The combination of a strong directional move followed by a gapped Doji reveals:

1. Trend Exhaustion: Previous trend has run its course
2. Momentum Break: Gap shows final push but Doji shows rejection
3. Indecision at Extremes: Uncertainty at potential top or bottom
4. Reversal Setup: Market preparing for direction change

The pattern's power comes from the gap itself - it represents an aggressive move by the trending side that immediately meets resistance, creating the Doji's indecision.

Pattern Recognition Criteria

Bullish Doji Star (in downtrend): 1. First Candle: Long bearish candle continuing the downtrend 2. Gap: Doji gaps down from first candle's body 3. Doji: Small body with open ≈ close, showing indecision 4. Location: At support level or after extended decline

Bearish Doji Star (in uptrend): 1. First Candle: Long bullish candle continuing the uptrend 2. Gap: Doji gaps up from first candle's body 3. Doji: Small body with open ≈ close, showing indecision 4. Location: At resistance level or after extended rally

Visual Pattern:

Bearish Doji Star:        Bullish Doji Star:

      ---  (Doji)                |    (Large down candle)
                                 |
    |                          ---    (Doji - gapped down)
    |    (Large up candle)
    |

Pattern Characteristics

• Range: Returns -100 (bearish), 0 (no pattern), or 100 (bullish)
• Type: Two-candle reversal pattern
• Lag: Real-time pattern recognition
• Best Used: After strong trends, at support/resistance, with volume confirmation
• Reliability: High when combined with trend context and confirmation

Interpretation

Value Ranges

• -100: Bearish Doji Star - potential downward reversal
• 0: No Doji Star pattern detected
• 100: Bullish Doji Star - potential upward reversal

Market Psychology

Bullish Doji Star Formation: 1. Strong Down Move: Bears dominate, pushing prices lower 2. Gap Down Opening: Bears aggressive, expecting continuation 3. Doji Forms: Despite gap, equal buying and selling pressure 4. Indecision: Bears cannot follow through despite aggressive start 5. Reversal Signal: Selling exhausted, buyers may take control

Bearish Doji Star Formation: 1. Strong Up Move: Bulls dominate, pushing prices higher 2. Gap Up Opening: Bulls aggressive, expecting continuation 3. Doji Forms: Despite gap, equal buying and selling pressure 4. Indecision: Bulls cannot follow through despite aggressive start 5. Reversal Signal: Buying exhausted, sellers may take control

Signal Interpretation

Context Matters: - Pattern must appear after established trend - Gap is critical - without gap, it's just a regular Doji - Strength of prior trend affects reliability - Distance of gap increases pattern significance

At Key Technical Levels: - Doji Star at support (bullish) = high probability bottom - Doji Star at resistance (bearish) = high probability top - Round numbers or psychological levels amplify the signal

Trading Signals

Buy Signals (Bullish Doji Star)

Conditions for buy signals:

1. Classic Setup
2. Appears after downtrend (3+ bearish candles)
3. Gap down between first candle and Doji
4. Doji shows small body and indecision

5. Third candle confirms with bullish close

6. High-Probability Setup

7. At support level or Fibonacci retracement
8. RSI < 30 (oversold)
9. High volume on confirmation candle
10. Third candle closes above Doji high and first candle's close

Example Scenario:

if doji_star[-2] == 100  # Bullish Doji Star two candles ago
  # Check for bullish confirmation
  if close[-1] > high[-2] && close[-1] > close[-3]
    puts "Bullish Doji Star confirmed - BUY signal"

    entry = close[-1]
    stop = low[-2] - (low[-2] * 0.005)
    risk = entry - stop
    target = entry + (risk * 2.5)

    puts "Entry: $#{entry.round(2)}"
    puts "Stop Loss: $#{stop.round(2)}"
    puts "Target: $#{target.round(2)}"
    puts "Risk:Reward = 1:2.5"
  end
end

Sell Signals (Bearish Doji Star)

Conditions for sell signals:

1. Classic Setup
2. Appears after uptrend (3+ bullish candles)
3. Gap up between first candle and Doji
4. Doji shows small body and indecision

5. Third candle confirms with bearish close

6. High-Probability Setup

7. At resistance level or Fibonacci extension
8. RSI > 70 (overbought)
9. High volume on confirmation candle
10. Third candle closes below Doji low and first candle's close

Example Scenario:

if doji_star[-2] == -100  # Bearish Doji Star two candles ago
  # Check for bearish confirmation
  if close[-1] < low[-2] && close[-1] < close[-3]
    puts "Bearish Doji Star confirmed - SELL signal"

    entry = close[-1]
    stop = high[-2] + (high[-2] * 0.005)
    risk = stop - entry
    target = entry - (risk * 2.5)

    puts "Entry: $#{entry.round(2)}"
    puts "Stop Loss: $#{stop.round(2)}"
    puts "Target: $#{target.round(2)}"
    puts "Risk:Reward = 1:2.5"
  end
end

Confirmation Requirements

Essential confirmation factors:

1. Trend Context: Clear preceding trend required
2. Gap Presence: Must have gap between bodies
3. Third Candle: Confirmation candle in reversal direction
4. Volume: Increasing volume on confirmation adds conviction
5. Technical Level: Support/resistance alignment increases probability

Advanced Confirmation:

if doji_star[-2].abs == 100
  gap_size = if doji_star[-2] == 100
    open[-2] - close[-3]  # Gap down size
  else
    open[-2] - close[-3]  # Gap up size
  end

  body_size = (close[-2] - open[-2]).abs
  gap_to_body_ratio = gap_size.abs / body_size

  if gap_to_body_ratio > 2
    puts "Strong gap (#{gap_to_body_ratio.round(1)}x body) - High probability pattern"
  elsif gap_to_body_ratio > 1
    puts "Moderate gap - Good setup"
  else
    puts "Small gap - Lower reliability"
  end
end

Best Practices

Optimal Use Cases

The Doji Star works best when:

Market Conditions: - After extended trends (5+ candles same direction) - At clearly defined support or resistance - Following parabolic moves or blow-off tops/bottoms - When momentum indicators show extremes or divergence

Time Frames: - Daily charts: Most reliable and traditional - Weekly charts: Rare but extremely significant - 4-hour charts: Good for swing trading - Intraday: Less reliable, requires strict confirmation

Asset Classes: - Stocks: Excellent, especially at earnings or news events - Indices: Very reliable for major reversals - Forex: Good with major pairs at key levels - Commodities: Effective after supply/demand shocks

Combining with Other Indicators

With Moving Averages:

doji_star = SQA::TAI.cdl_dojistar(open, high, low, close)
ema_20 = SQA::TAI.ema(close, period: 20)
ema_50 = SQA::TAI.ema(close, period: 50)

if doji_star.last == 100
  # Bullish Doji Star
  if close[-3] < ema_20[-3] && ema_20.last > ema_50.last
    puts "Bullish Doji Star with MA crossover - Strong buy setup"
  end
elsif doji_star.last == -100
  # Bearish Doji Star
  if close[-3] > ema_20[-3] && ema_20.last < ema_50.last
    puts "Bearish Doji Star with MA crossover - Strong sell setup"
  end
end

With RSI:

doji_star = SQA::TAI.cdl_dojistar(open, high, low, close)
rsi = SQA::TAI.rsi(close, period: 14)

if doji_star.last == 100 && rsi.last < 30
  puts "Bullish Doji Star + Oversold RSI - STRONG BUY"
elsif doji_star.last == -100 && rsi.last > 70
  puts "Bearish Doji Star + Overbought RSI - STRONG SELL"
end

With Support/Resistance:

doji_star = SQA::TAI.cdl_dojistar(open, high, low, close)

# Find key levels
resistance = high[-60..-3].max
support = low[-60..-3].min

if doji_star.last == 100
  distance_to_support = ((low[-2] - support) / support * 100).abs
  if distance_to_support < 2
    puts "Bullish Doji Star AT SUPPORT - High probability"
  end
elsif doji_star.last == -100
  distance_to_resistance = ((high[-2] - resistance) / resistance * 100).abs
  if distance_to_resistance < 2
    puts "Bearish Doji Star AT RESISTANCE - High probability"
  end
end

Common Pitfalls

1. No Gap Present
2. Pattern requires gap between bodies
3. Without gap, it's just a regular Doji

4. Overlapping bodies = invalid pattern

5. Trading Without Confirmation

6. Never enter on Doji Star formation alone
7. Wait for third candle to validate direction

8. Premature entry leads to whipsaws

9. Ignoring Trend Context

10. Pattern only valid after established trend
11. Mid-consolidation Doji Stars are unreliable

12. Trend strength affects pattern reliability

13. Wrong Stop Placement

14. Stop should be beyond Doji's extreme
15. Too tight = premature exit
16. Too wide = poor risk:reward

Parameter Selection Guidelines

Day Trading: - Use 1-hour or 4-hour charts minimum - Require immediate confirmation - Tighter stops (1-2% beyond extremes) - Be cautious of false gaps in illiquid hours

Swing Trading: - Use daily charts for best results - Allow 1-2 days for confirmation - Stops 2-3% beyond pattern extremes - Optimal risk:reward ratios

Position Trading: - Use daily or weekly charts - Wait for full week confirmation on weekly patterns - Wider stops (5-7%) on weekly timeframes - Major trend reversals possible

Practical Example

Complete Doji Star trading system:

require 'sqa/tai'

# Load data
open, high, low, close, volume = load_ohlc_volume_data('NVDA')

# Calculate indicators
doji_star = SQA::TAI.cdl_dojistar(open, high, low, close)
rsi = SQA::TAI.rsi(close, period: 14)
ema_20 = SQA::TAI.ema(close, period: 20)
ema_50 = SQA::TAI.ema(close, period: 50)
volume_sma = SQA::TAI.sma(volume, period: 20)

# Check for Doji Star pattern
if doji_star[-2].abs == 100
  puts "Doji Star Pattern Analysis"
  puts "=" * 60

  pattern_type = doji_star[-2] == 100 ? "Bullish" : "Bearish"
  puts "Pattern Type: #{pattern_type} Doji Star"

  # Trend analysis
  if pattern_type == "Bullish"
    trend_candles = close[-8..-3].select { |c| c < close[-9] }.count
    in_downtrend = trend_candles >= 4
    puts "In Downtrend: #{in_downtrend ? 'Yes' : 'No'} (#{trend_candles}/5 down candles)"
  else
    trend_candles = close[-8..-3].select { |c| c > close[-9] }.count
    in_uptrend = trend_candles >= 4
    puts "In Uptrend: #{in_uptrend ? 'Yes' : 'No'} (#{trend_candles}/5 up candles)"
  end

  # Gap analysis
  gap_size = (open[-2] - close[-3]).abs
  gap_percent = (gap_size / close[-3] * 100).round(2)
  puts "Gap Size: $#{gap_size.round(2)} (#{gap_percent}%)"

  # Doji characteristics
  doji_body = (close[-2] - open[-2]).abs
  doji_range = high[-2] - low[-2]
  body_to_range = (doji_body / doji_range * 100).round(1)
  puts "Doji Body/Range: #{body_to_range}% (smaller is better)"

  # RSI check
  rsi_val = rsi[-2]
  if pattern_type == "Bullish"
    rsi_status = rsi_val < 30 ? "Oversold - Excellent" : (rsi_val < 40 ? "Low - Good" : "Neutral")
  else
    rsi_status = rsi_val > 70 ? "Overbought - Excellent" : (rsi_val > 60 ? "High - Good" : "Neutral")
  end
  puts "RSI: #{rsi_val.round(2)} (#{rsi_status})"

  # Volume
  vol_ratio = volume[-2] / volume_sma[-2]
  puts "Volume: #{vol_ratio.round(2)}x average"

  # Key levels
  resistance = high[-60..-3].max
  support = low[-60..-3].min

  if pattern_type == "Bullish"
    distance = ((low[-2] - support) / support * 100).abs
    at_level = distance < 3
    puts "Distance to Support: #{distance.round(2)}% #{at_level ? '(AT SUPPORT)' : ''}"
  else
    distance = ((high[-2] - resistance) / resistance * 100).abs
    at_level = distance < 3
    puts "Distance to Resistance: #{distance.round(2)}% #{at_level ? '(AT RESISTANCE)' : ''}"
  end

  # Confirmation check
  has_confirmation = if pattern_type == "Bullish"
    close[-1] > high[-2] && close[-1] > close[-3]
  else
    close[-1] < low[-2] && close[-1] < close[-3]
  end

  puts "\nConfirmation: #{has_confirmation ? 'YES' : 'WAITING'}"

  # Scoring system
  score = 0
  score += 2 if (pattern_type == "Bullish" && in_downtrend) || (pattern_type == "Bearish" && in_uptrend)
  score += 1 if gap_percent > 0.5
  score += 1 if body_to_range < 20
  score += 1 if (pattern_type == "Bullish" && rsi_val < 40) || (pattern_type == "Bearish" && rsi_val > 60)
  score += 1 if vol_ratio > 1.2
  score += 1 if at_level
  score += 2 if has_confirmation

  puts "\nSetup Quality Score: #{score}/9"

  # Trade execution
  if has_confirmation && score >= 7
    if pattern_type == "Bullish"
      entry = close[-1]
      stop = low[-2] - (low[-2] * 0.008)
      risk = entry - stop
      target = entry + (risk * 3)

      puts "\n*** STRONG BULLISH SETUP - BUY SIGNAL ***"
      puts "Entry: $#{entry.round(2)}"
      puts "Stop Loss: $#{stop.round(2)}"
      puts "Target: $#{target.round(2)}"
      puts "Risk: $#{risk.round(2)} (#{((risk/entry)*100).round(2)}%)"
      puts "Reward: $#{(target-entry).round(2)} (#{(((target-entry)/entry)*100).round(2)}%)"
      puts "R:R = 1:3"

    else
      entry = close[-1]
      stop = high[-2] + (high[-2] * 0.008)
      risk = stop - entry
      target = entry - (risk * 3)

      puts "\n*** STRONG BEARISH SETUP - SELL SIGNAL ***"
      puts "Entry: $#{entry.round(2)}"
      puts "Stop Loss: $#{stop.round(2)}"
      puts "Target: $#{target.round(2)}"
      puts "Risk: $#{risk.round(2)} (#{((risk/entry)*100).round(2)}%)"
      puts "Reward: $#{(entry-target).round(2)} (#{(((entry-target)/entry)*100).round(2)}%)"
      puts "R:R = 1:3"
    end

  elsif score >= 5
    puts "\nDECENT SETUP (Score: #{score}/9)"
    puts "Consider: Reduced position size or wait for better confirmation"

  else
    puts "\nLOW PROBABILITY SETUP (Score: #{score}/9)"
    puts "Recommendation: Skip this trade"
  end
end

Related Indicators

Similar Patterns

• Doji: Single-candle indecision pattern without gap requirement
• Morning Star: Three-candle bullish reversal with Doji as middle candle
• Evening Star: Three-candle bearish reversal with Doji as middle candle
• Abandoned Baby: Rare gapped Doji pattern with gaps on both sides

Complementary Patterns

• Engulfing: Strong two-candle reversal pattern
• Harami: Two-candle pattern showing momentum shift
• Piercing Line: Bullish two-candle reversal
• Dark Cloud Cover: Bearish two-candle reversal

Pattern Family

The Doji Star is part of the star pattern family: - Doji Star: Reversal pattern with gapped Doji - Morning Star: Bullish reversal with small-bodied middle candle - Evening Star: Bearish reversal with small-bodied middle candle - Abandoned Baby: Rare pattern with gaps on both sides of Doji

Advanced Topics

Multi-Timeframe Analysis

Increase probability by confirming across timeframes:

# Daily Doji Star - primary signal
daily_doji_star = SQA::TAI.cdl_dojistar(daily_open, daily_high, daily_low, daily_close)

# Weekly trend - larger context
weekly_trend = weekly_close.last > weekly_sma50.last ? "up" : "down"

# 4-hour confirmation - precise timing
hourly_confirmation = if daily_doji_star.last == 100
  hourly_close.last > hourly_high[-5]
else
  hourly_close.last < hourly_low[-5]
end

if daily_doji_star.last.abs == 100
  puts "Daily Doji Star detected"
  puts "Weekly trend: #{weekly_trend}"
  puts "4-hour confirmation: #{hourly_confirmation ? 'Yes' : 'Pending'}"

  if (daily_doji_star.last == 100 && weekly_trend == "down") ||
     (daily_doji_star.last == -100 && weekly_trend == "up")
    puts "High probability major reversal setup!"
  end
end

Market Regime Adaptation

Trending Markets: - Doji Star highly reliable as reversal - Strong confirmation candles expected - Larger price targets justified

Ranging Markets: - Doji Star at range boundaries - Expect smaller reversals - Quick profit-taking recommended

High Volatility: - Larger gaps common - Wider stops required - Pattern remains valid but needs larger confirmation

Statistical Validation

Research and backtesting indicate: - Success Rate: 65-70% with proper confirmation - Best Performance: At support/resistance with RSI extremes - Gap Impact: Larger gaps (>1%) improve success by 15-20% - Volume: High volume increases reliability by 20% - Confirmation: Third candle confirmation adds 25-30% to success rate

References

• Nison, Steve. "Japanese Candlestick Charting Techniques" - Comprehensive star pattern analysis
• Bulkowski, Thomas N. "Encyclopedia of Candlestick Charts" - Statistical performance data
• Morris, Gregory L. "Candlestick Charting Explained" - Practical trading applications
• StockCharts.com - Doji Star - Educational resource

See Also

• Candlestick Pattern Overview
• Doji Pattern
• Morning Star Pattern
• Evening Star Pattern
• Abandoned Baby Pattern
• RSI Indicator