Morning Star Candle Pattern


Typically, the 3rd candle forms a bullish reversal pattern. The Morning Star pattern indicates a bullish reversal pattern in technical analysis, indicating a potential reversal of a bearish trend to a bullish trend. The pattern is considered valid if there is confirmation from other technical indicators and higher volume on the third and fourth candles compared to the first and second. The morning star candlestick pattern is a three-candlestick reversal pattern that indicates bullish signs to technical analysts. The first candlestick is a long bearish candlestick, followed by a small bullish or bearish candlestick, and finally, a long bullish candlestick. This morning star candlestick acts as a bullish reversal of the downward price trend because price drops into the candle and exits out the top.

morning star

The rising window candlestick pattern indicates a continuation of the uptrend. The High wave candlestick pattern has a long upper wick and a long lower wick with a small body. These long wicks indicate a rapid price movement within the given timeframe. In the end, nobody can take the price in their direction, and the price is close to the opening price and form a small body with long upper and long lower wicks. Doji candlestick shows indecisiveness among buyers and sellers. This candle opens and closes on the same level, which creates confusion among traders.


And so, when the percent D line of the Stochastics indicator is in oversold territory, then that is usually a signal that prices are more likely to reverse to the upside. When you couple that oversold reading with a candlestick pattern like the Morning Star, that can provide for a high probability play to the long side. There are several ways that a trader can execute a buy entry using the Morning Star formation. When this occurs it provides confirmation of continued upside momentum following the Morning Star formation, which should lead to additional price gains to the upside. The Morning Star pattern is not very effective in a bearish market because its signal is against the downtrend. However, the pattern could signal a short-term rally or consolidation before the downtrend resumes.

How to trade a Morning Star candlestick pattern?

How to using Morning Star PatternThe entry can be placed at the open of the next candle after the morning star pattern has developed. Stoploss can be placed below the recent low and the initial target level can be set at key levels or recent areas of support/resistance. Identifying the Morning Star on charts involves more than simply identifying the three main candles. In addition to this pattern itself, the trader can also take clues from other technical indicators to identify the formation of a morning star pattern. Attention to volume is important, as a higher volume spike on the third candle adds strength to the reversal signal. A stop loss and a well-defined trading plan are always recommended when trading with other candlestick patterns.

bearish reversal pattern makes no warranty that its content will be accurate, timely, useful, or reliable. Mr. Pines has traded on the NYSE, CBOE and Pacific Stock Exchange. In 2011, Mr. Pines started his own consulting firm through which he advises law firms and investment professionals on issues related to trading, and derivatives. Lawrence has served as an expert witness in a number of high profile trials in US Federal and international courts. The bulls then took hold of the Midcap 400 exchange traded fund for the entire day. You first confirm the Doji Morning Star and look at the MACD histogram and the signal line.

We all know by now that without moving average lines wouldn’t mean anything. While this is true, they do end up providing some pretty nice help. While the third candle should be a large bullish candlestick we know that chart patterns aren’t always perfect.

We can see towards the bottom of this chart there was a Forex Morning Star pattern. When trading the bullish Morning Star pattern, it’s best to focus on the highest probability set ups. One of the ways to do that is to take those trades wherein a bullish Morning Star pattern occurs at a key support level.

When you spot the pattern at a support level, you can use momentum oscillators like stochastic or RSI to confirm the reversal signal. An RSI rising from an oversold region following the formation of a Morning Star pattern around a support level confirms the bullish reversal signal. You can combine the Morning Star pattern with other technical analysis tools and indicators.

Morning star (candlestick pattern)

Well, on this day, the bears in the market are quite strong and keeping the price of the security low. Morning Star Candlestick Pattern is a vital pattern which can be observed in the price movement of a stock market security. Usually, a morning star pattern consists of three separate candlesticks. The opposite of a Morning Star pattern is the Evening Star, a bearish reversal pattern that signals a potential reversal of an uptrend to a downtrend. Using Common candlestick patterns is a standard tool used by day traders to make informed decisions about when to… Like with all candle patterns, do not rely on their information solely to enter trade positions.

The secret to success is to use it in a demo account before you use it with your money. There is no perfect answer to this question cause every trader uses these patterns as per their psychological and technical knowledge. But for me, Engulfing, Morning Star, and Evening Star Patterns, and all hammer candlestick patterns, are the most powerful candlestick patterns.

In the right market condition, the pattern can give a strong signal for taking long positions or closing short positions. When combined with other tools, such as trendlines and support levels, the pattern can be used to formulate a trading strategy. An evening star pattern is a bearish 3-bar reversal candlestick patternIt starts with a tall green candle, then a… The traders are now confirmed about the candlestick pattern.


Reversal indicators – It can be used by other reversal indicators like double exponential moving averages. A good example of the evening star pattern is shown in the NZD/USD pair below. And the last candlestick is also a healthy candlestick confirming the previous two candles by closing below them.

Every pattern only works perfectly at a specific location or trend. Candlestick is one of the most used variables representing price with open, close, high, and low. If you would like to contact the Bullish Bears team then please email us at bbteam[@] and we will get back to you within 24 hours. One should look to buy at this point, as the price is expected to go higher for nest few trading sessions.

What is a Morning Star Pattern?

As such, our expectation would be for a increase following the completion of the Morning Star pattern. Let’s now look at another filter that works well with the Morning Star set up. The performance of the Morning Star pattern can vary in different market conditions, such as bull market, bear market, and sideways market. Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors.

  • Candlestick is one of the most used variables representing price with open, close, high, and low.
  • Once the reversal takes place, it will be easy for a trader to observe a higher high and a higher low.
  • Difference between the heights of the first and third candlesticks.
  • They are best when validated by other methods such as technical indicators and trading strategies.

This candlestick pattern is also easy to identify as they happen frequently in the charts. However, in fast-moving markets like forex, this can prove to be dangerous. In this situation, the trader might take a wrong entry at a much higher price level which would cause losses or very limited returns. The occurrence of a morning star pattern may not be a frequent one in the stock market. A trader may observe a bullish gap up and it is easy to watch how the bulls pull the price of the security upwards.

Difference between the heights of the first and third candlesticks. That is, when the third candlestick has no upper shadow, it is most reliable. However, the trader needs to take into account volume and the fundamentals before solely trusting the technical.

It means the ongoing downtrend is about to change from down to up. Morning star patterns are one of the smaller of the candlesticks patterns. They do present a pretty important reversal signal but can break down. Long legged doji candlesticks show you that the bulls and the bears fought a hard battle with no resolution. By closing time they ended up right back where they started.

Do not use this candlestick pattern alone to search for trades. Combine it with at least one indicator or another price signal for a higher probability of winning. The Doji Morning Star indicates a bullish reversal following a downward trend. As such, it appears at the end of a downtrend and suggests that sellers are losing momentum. Multi-assets – The candlestick pattern can be used in all assets including currencies and stocks.

The moving average lines used on stock charts provide support and resistance. A morning star is a visual pattern consisting of three candlesticks that are described as a bullish sign. Traders watch for the formation of a morning star and then seek confirmation that a reversal is indeed happening using technical indicators. Evening Star CandlestickThe Evening Star pattern is a bearish reversal candlestick pattern that appears at the top of an uptrend.

Leave a Comment

Your email address will not be published. Required fields are marked *