Morning Star Candlestick


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day’s bearish candlestick

The evening star is a bearish pattern, which occurs at the top end of an uptrend. The idea is to go short on P3, with the highest pattern acting as a stop loss. There are many candlestick patterns, and I could go on explaining these patterns, but that would defeat the ultimate goal. The first candle shows that a downtrend was occurring and the bears were in control.

What Does a Morning Star Tell Us About the Market?

The morning star candlestick pattern is very popular with price action traders. The best combination is to use analytical indicators to identify trends. 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. Notice that the bottom of the candle stick pattern appears to be resting on a support zone created by the tall black candle that gaps downward in late July. Of course, such a support zone may not be noticeable until after the fact unless there is additional support hidden to the left of the chart. When found in a downtrend, this pattern can be an indication that a reversal in the price trend is going to take place.

It tells you that both the and the sellers are in equilibrium. What happened in the second candle is interesting, because usually when you get a strong-bodied candle, chances are the mixed candle tend to continue to move. However, while it’s used with a 14-period length by default, we’ve had the best results with far shorter settings. Just remember that these are not made with live trading in mind, but to give you a couple of examples that hopefully will ignite your own creativity. Many of our own strategies aren’t more complicated than those below, and if we were to create new strategies, we certainly would try the things we include below. The volume of this bar is greater than the volume of the previous bar.

A bullish reversal pattern called a morning star pattern occurs at the bottom of a downtrend. It shows that buyers have taken control of the price in an upswing, while sellers have lost momentum. It is a U-shaped combination of several candlesticks that shows a change in the trend’s direction.

  • When the bullish candle appears after the Doji, then there will be a bullish confirmation.
  • The strength of the Morning Star pattern depends on the market condition and the setting where it occurs.
  • Large bullish candle – The small morning star is followed by a large bullish candlestick.
  • This is done by making a comparison to the average bar size found in the reference period.

On the first day, bears are definitely in charge, usually making new lows. Get $25,000 of virtual funds and prove your skills in real market conditions. When it comes to the speed we execute your trades, no expense is spared. ThinkMarkets ensures high levels of client satisfaction with high client retention and conversion rates. Increase your income and get compensated for your trading knowledge with ThinkInvest, putting you in control. Gordon Scott has been an active investor and technical analyst or 20+ years.

Morning Star Pattern: How to Identify a Bullish Reversal in Crypto

Unlike the single and two patterns, both the risk taker and the risk-averse trader can initiate the trade on P3 itself. Waiting for a confirmation on the 4th day may not be necessary while trading based on a morning star pattern. Candlestick Charts are one of the most used charts for trading. These charts are easy to understand and provide such information to traders in a single visual representation. They show the price movement of a security, such as a stock or currency, over a specific time frame. The candlestick comprises a “body” representing the difference between the opening and closing price and a “wick” showing high and low prices.

It’s essential to practice sound risk management while trading any kind of reversal pattern. That entails placing a stop loss and generating profits when certain levels are reached. The morning star is merely a visual representation; no calculations are required. There are other additional ways where you can see the star forming. After three sessions, you’ll either see it is performing, or it doesn’t occur at all.

If I were based on this, I would expose very little capital on this trade simply because of the two point I just mentioned. Think about car driving; once you learn how to drive a car, it does not matter which car you drive. Driving a Honda is pretty much the same as driving a Hyundai or Ford. Driving comes naturally irrespective of which car you are driving. Likewise, once you train your mind to read the thought process behind a candlestick, it does not matter which pattern you see.

The Morning Star is a bullish, bottom reversal pattern that is the opposite of the Evening Star. It warns of weakness in an existing downtrend that could potentially lead to a trend reversal and the establishment of a new uptrend. Like the Evening Star, the Morning Star consists of three candlesticks with the middle candlestick forming a star.

It is a dual candlestick pattern with the first candlestick being light in color and having a large real body. The second candlestick must be dark in color, must open higher than the high of the first candlestick and must close down, well into the real body of the first candlestick. The deeper the second candlestick penetrates the first, the more reliable the pattern becomes. In general, you shouldn’t use candlestick patterns like the morning star candle on their own without some sort of confirmation. The edge, if there is any, simply tends to be too weak, and you’ll need to introduce additional filters to improve the profitability of the signal. As mentioned above, the morning star candlestick pattern is eerily similar to the evening star.


In this case, though there was no trading activity between Rs.100 and Rs.95, the stock plummeted to Rs.95. In the following image, the green arrows point to a gap down opening. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Morning Star Pattern in Forex

It will require some additional market analysis and as always, excellent money management. The morning star candlestick is a three-candle pattern that shows a reversal in the market. It is crucial to correctly spot reversals when trading financial markets because it makes it possible for traders to enter at good levels at the beginning of a possible trend reversal.

reversal pattern

But in the second, the open and close prices are almost equal. Suddenly, buyers and sellers are cancelling each other out, meaning bears couldn’t maintain control of the market. Then, finally, bulls take over in the final session with a strong green candlestick.

All four of these websites offer users the ability to screen for stocks using various criteria, including price, volume, technical, and fundamental indicators. An increase in volume can be observed during the formation of a Morning Star pattern, which can be used as a confirmation that the pattern is present. An increase in volume frequently follows large market changes and might lend credence to the argument that a trend is shifting in the other direction. The formation of a Morning Star pattern typically occurs near the end of a downward trend in the market, and it is indicative of a possible shift in the market’s direction. There are no specific calculations because a morning star is simply a visual pattern.

Bull market

Deepen your knowledge of technical analysis indicators and hone your skills as a trader. A morning star is a three-candle pattern with the low point on the second candle. However, the low point is only apparent after the close of the third candle. A morning star is a visual pattern, so there are no particular calculations to perform. All information on The Forex Geek website is for educational purposes only and is not intended to provide financial advice. Any statements about profits or income, expressed or implied, do not represent a guarantee.

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