Morning Star Pattern

Question 1

What is a Morning Star Candlestick pattern?

Answer 1

The Morning Star Candlestick pattern is a three-candle, bullish reversal candlestick pattern that appears at the bottom of a downtrend. It reveals a slowing down of downward momentum before a large bullish move lays the foundation for a new uptrend.

Question 2

What is a Morning Star Doji Candlestick pattern?

Answer 2

Doji candles can be observed as the market opens and closes at the same level or very close to the same level. This indecision paves the way for a bullish move as bulls see value at this level and prevent further selling. The appearance of the bullish candle after the Doji provides this bullish confirmation.

Question 3

How to identify a Morning Star on charts?

Answer 3

1. Establish an existing downtrend.
2. Large bearish candle.
3. Small bearish/bullish candle.
4. Large bullish candle.
5. Subsequent price action.

Question 4

How to trade the Morning Star pattern?

Answer 4

1. Once the formation has been completed, enter at the opening of the very next candle.
2. Targets can be placed at previous levels of resistance or previous area of consolidation.
3. Stops can be placed below the recent swing low.