In this tutorial, we'll look at what a morning star candlestick is and how it suggests a turnaround in price direction following a bearish trend, as well as a trading strategy that uses the morning star candlestick pattern.

• What is the Morning Star Pattern?
• Key Points of the Morning Star Candlestick Pattern
• Identifying a Morning Star Pattern
• What the Morning Star Pattern Indicates to Traders
• Limitations of Using the Morning Star Pattern

A morning star is a visual pattern made up of three candlesticks that technical analysts interpret as optimistic signals. A morning star appears after a declining trend and marks the beginning of an upward journey. It's a symptom of the prior price trend reversing. Traders look for the development of a morning star, then use additional indications to confirm that a reversal is taking place.

The morning star is a symbol for the transition from a bearish to a bullish trend. Bearish selling forces the price downward, leading to the commencement of the candle pattern. On the chart, a large red candle appears, signaling that further downside is on the way. However, the next day, a little candle emerges (called the star). It might be red or green, and it's a sign of a trend shift. Bulls are licking their chops as bears scratch their heads, attempting to figure out what occurred. The bulls rush the next day, scaring the bears away, leaving a tall green candle to print on the chart.

• A morning star is a three-candlestick design consisting of one tall red candlestick, one smaller red or green candlestick with a short body and optional shadow, and a third tall green candlestick.
• The morning star's middle candle depicts a time when the market is indecisive and the bears are beginning to give way to the bulls. The reversal is confirmed by the third candle, which might signal the start of a new uptrend.

Because a morning star simply a visual pattern, no special calculations are required. A morning star is a three-candle pattern in which the second candle has the lowest point. The low point, on the other hand, is only visible after the third candle has closed. The morning star's center candle might be red or green as buyers and sellers begin to balance out during the course of the session.

To confirm that the candlestick pattern is "morning star," consider the following points.

• A morning star is a three-candle pattern.
• The market is on a downward trend.
• The first day is a long red candle.
• The second day candle is a small candle of any color whose body remains below the preceding bearish candle.
• The third day candle is a huge green candle that closes above the middle of the first day's bearish candle.
• Ignore the shadows in this candlestick pattern.

A morning star candlestick pattern may be seen in the chart above. This one emerges after a lengthy upward price trend retracement. There are two red candles, followed by a towering green candle. The pattern's star, the middle candle, has a lower shadow, indicating that bullish purchasing pressure successfully fought off bearish selling pressure.

Morning star patterns may be used as a visual signal for the commencement of a trend reversal from bearish to bullish, but they become more significant when other technical indicators, such as those stated before, back them up. Another major aspect that contributes to pattern creation is volume.

A trader wants to see volume increase throughout the course of the three sessions that make up the pattern, with the third day having the largest volume. Regardless of other signs, high volume on the third day is frequently considered as a confirmation of the pattern (and a future upswing). As the morning star appears in the third session, a trader will take a bullish position in the stock/commodity/pair/etc. and ride the uptrend until there are signs of another reversal.

Trading simply based on the appearance of a morning star in your chart might be quite dangerous. A solitary morning star discovered near the bottom of a decline does not necessarily imply that the bearish momentum has ended. When a morning star is backed up by a wider time frame and volume, as well as reversing off of a support level, it is at its finest.