The morning star candlestick pattern is a bearish to bullish reversal pattern. When it comes to candlestick patterns, the more candlesticks they contain, the more reliable they are.
Since Steve Nison introduced Japanese candlesticks to western traders, it’s been adopted worldwide on every trading platform.
As we all know, candlestick patterns can contain a pair or trio of candlesticks. A dual candlestick pattern contains two candlesticks.
On the contrary, the triple candlestick pattern contains three candlesticks so they contain more information!
The morning and evening star formations are examples of triple candlestick patterns. They are both reversal patterns found at the end of trends. In this article, the former will be spoken on.
What Is a Morning Star Pattern?
The morning star candlestick pattern is a candlestick pattern that contains three candlesticks. It indicates that a strong bullish move might occur soon.
This chart pattern is formed when a bearish candle (black or red) is followed by a candlestick with a small body which is then preceded by a large bullish candlestick (white or green).
Furthermore, it is a candlestick pattern that changes the course of the market from a bearish narrative to a bullish trend. Therefore, it is a bearish to bullish reversal pattern.
The morning star candlestick pattern typically looks like this:
The candlestick on the left is the last of the downtrend while the one on the right starts the uptrend.
Again, the indecision candle can either be bullish or bearish (black, white /red, green).
What Does The Morning Star Pattern Tell You?
A morning star is a visual pattern so no calculations are involved. As seen above, the smallest of these three candles is the second candlestick.
However, this is not evident until after the close of the third candlestick. So, it is important to wait for the pattern to be complete.
The first candlestick pattern is a strong bearish candle as the momentum of the downtrend has not slowed down yet.
Hence, the second candle is a candlestick; either bullish or bearish, with a very small body. The small candlestick indicates indecision in the market place and it’s the first sign of a reversal.
Lastly, the third candlestick validates the whole formation. If it is a bullish candle with a large body, the resulting pattern formed is called the morning star candlestick pattern.
A buy order can now be placed with the anticipation of higher pricing.
Doji Morning Star
The Morning Doji Star is similar to the Morning Star candlestick pattern. It also signals a bullish reversal, the pattern is only confirmed when the third candle closes convincingly above the second candlestick in the pattern.
The Difference Between a Morning Star and a Doji Morning Star
For the morning star pattern, the second candle is usually a candlestick with a very little body. However, in the Doji morning star, it differs as seen below.
A Doji is found instead; it is a rare candlestick that doesn’t have a body. In Japanese, it means mistake which refers to the rare occasion of a market opening and closing at the same price.
This type of candlestick indicates major indecision. In the market session, neither the bulls nor bears were in control.
However, the Doji morning star candlestick pattern validates the market indecision more convincingly than a morning star pattern.
How To Trade The Morning Star Candlestick Pattern
Morning star patterns are a bearish to bullish reversal pattern. Therefore, only buy positions should be opened.
On the other hand, if a sell position is being held and this pattern forms, profits will be taken since a possible reversal is imminent.
Three market sessions make up this pattern. Ideally, a gradual introduction of bullish momentum is desired.
The volume indicator can be used to monitor the momentum present. In all honesty, trades should not be taken only due to the formation of the morning star pattern.
A complete trading system has to be sophisticated and flexible. Hence, other indicators and strategies are used with this pattern as the icing on top.
The morning Doji star pattern is a bearish-bullish visual pattern. It is composed of one bearish and bullish candle respectively. In between them lies a Doji candle which signals indecision in the marketplace.
At first glance, there is no difference between this pattern and the morning star. But the morning star contains a candlestick with a little body in place of the Doji.
The morning star is a bullish reversal pattern that contains three candlesticks. It forms at the end of downtrends reversing the price to the upside.
The morning star pattern is only valid when found at the end of downtrends. Once found a quick check to determine the validity of the pattern is
This is done simply by making sure the third candle in the pattern has a large body.
Then, a buy order can now be placed and higher prices are expected.
Summary; Morning Star Candlestick Pattern- Complete Tutorial
Making trading decisions based on candlestick patterns alone is not advised. A major trading system should be adopted while the morning star is used as a means of confirmation.
Besides, more emphasis should be placed on the Doji morning star pattern. The presence of a Doji makes it more reliable.