HDFC Bank had been in a persistent downtrend, with sellers dominating and consistently driving the stock price lower. On one particular day, the stock formed a large bearish candle, opening at ₹1890 and closing sharply lower at ₹1865, after reaching an intraday high of ₹1895 and a low of ₹1860. This strong bearish performance underscored the prevailing selling pressure in the market.
In the next session, the stock opened lower at ₹1850, signalling the continuation of selling momentum. However, the price action during the day showed indecision, with neither buyers nor sellers gaining the upper hand. The stock traded in a narrow range, reaching an intraday high of ₹1855 and a low of ₹1845, eventually closing unchanged at ₹1850. This session resulted in the formation of a small candle, often referred to as a "Doji" or a small-bodied candle, reflecting a pause in the prevailing trend and hinting at potential reversal.
The third session brought a sharp change in sentiment. The stock opened higher at ₹1868, indicating renewed buying interest. Throughout the day, buyers-maintained control, driving the price higher to an intraday high of ₹1893, before closing strongly at ₹1880. This session formed a large bullish candle, completing the Morning Star candlestick pattern.
The Morning Star is a three-candle pattern that signals a potential reversal from a downtrend to an uptrend. The first candle is a large bearish one, indicating strong selling pressure. The second is a small-bodied candle that reflects indecision or a pause in the trend. The third is a large bullish candle confirming a shift in market sentiment.
This pattern suggests that selling pressure is waning and buyers are regaining control, paving the way for a potential upward move. For traders, the Morning Star is often considered a strong bullish reversal signal, encouraging them to look for further confirmation of upward momentum before taking long positions.
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