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Morning Star Pattern: A Bullish Reversal Signal

Morning Star Candlestick Pattern

Traders should not confuse the morning star candle formation with other formations, such as the evening star, which is the complete opposite. In this article, we’ll explore the characteristics of the morning star pattern, its reliability, the psychology behind its formation, and how you can analyze it using TradingView. The first bar in the Morning Star candlestick pattern is a large body down-close whereas the second candle is a small body. The third and final bar is a large body up-close with a close above the midpoint of the the first candle’s body.

  • After three sessions, you’ll either see it is performing, or it doesn’t occur at all.
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  • Gordon Scott has been an active investor and technical analyst or 20+ years.
  • This can be seen by how the Doji has a long upper shadow, which shows that the bears tried to push prices lower but eventually failed.
  • By understanding its characteristics, reliability, and the psychology behind its formation, traders can make more informed decisions.

The morning star is a bullish candlestick pattern which evolves over a three day period. The main difference between the morning star candlestick and evening star candlestick patterns is that the morning star is considered a bullish indicator, while the evening star is bearish. The first candle should be a long bullish candle indicating that the bulls have control over the market.

Morning Stars: How To Trade the Morning Star Candlestick Pattern

When trading the morning star pattern, there are possibly two ways to enter a trade. The first method is to wait for the pattern’s third candle to close before establishing a long position on the following candlestick. The second method is to set a stop-loss order below the low of the third candle in the pattern. All four conditions present in the morning star structure are valid here as well. Generally, a trader wants to see volume increasing throughout the three sessions making up the pattern, with the third day seeing the most volume.

How reliable is morning star candlestick?

The morning star candlestick acts in reality as it is supposed to in theory: a bullish reversal 78% of the time. That ranks 6th where 1 is best out of 103 candlestick types. The overall performance rank is 12th, and that attests to the strength of the post breakout trend.

In the chart above, you can see the market trend reversal following the formation of the Doji Morning Star. Here, you’ll enter a long position when you notice the last bullish candle. So, it’s important to understand what the candlestick patterns are telling you. The morning star is merely a visual representation; no calculations are required. After three sessions, you’ll either see it is performing, or it doesn’t occur at all.

Analyzing Patterns with TradingView

The low point, however, is not visible until the third candle has closed. Practise spotting evening stars on’s trading simulator – with £10,000 virtual funds and 12,000 live markets to trade. Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully.

  • The first candlestick is a long bearish candlestick, followed by a small bullish or bearish candlestick, and finally, a long bullish candlestick.
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  • Firstly, a long bearish candle is formed, which signals a continuation of the previous downward price trend.
  • The morning star candlestick pattern is easily recognizable on a chart since it consists of three different candlesticks.
  • The information provided does not take into account your specific investment objectives, financial situation or particular needs.
  • 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.

However, some traders may choose to place their stop loss below the low of the first red candle, as this will provide more room for the trade to move before being stopped out. The Doji Morning Star Pattern is formed when a Doji, or a candlestick with a very small body, gaps below the previous candlestick and then rallies to close above that candlestick open. 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.

How to identify a morning star candlestick

The important thing to note about the morning star is that the middle candle can be black or white (or red or green) as the buyers and sellers start to balance out over the session. We are beginning a new theme “Trading strategy’s most important technical analysis tools”. Today we are going to tell you about the most important things in trading, candlesticks! 📌Japanese candlestick charts were developed in the 17th-18th centuries by the Japanese rice traders. Technical analysts use the Evening Star pattern to identify a bearish reversal pattern in the chart. It is a strong candle stick pattern because it shows a shift in momentum from bullish to bearish.

Morning Star Candlestick Pattern

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