Morning Star Stock Pattern

support and resistance

All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. 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.


Three things to be aware about when trading the Morning StarThe middle session usually takes the shape of a spinning top. A Doji morning star, however, is a variant of this pattern in which the middle stick is a Doji. The market has recovered a minimum of 50% of its losses from the first session if the last candle closes more than halfway up the body of the first. Typically, the first of the three candles has the longest body.

Please read Characteristics and Risks of Standardized Options. Large bullish candle – The small morning star is followed by a large bullish candlestick. Although the pattern gives a bullish signal, in a strong downtrend, the signal may not be strong enough to reverse the trend.

Stock Sector

My question is the road to ceo on chart what Nitesh’s posted in above comment. The stop loss for the trade will be the highest high of P1, P2, and P3. Our gain and loss percentage calculator quickly tells you the percentage of your account balance that you have won or lost. If you’d like a primer on how to trade commodities in general, please see our introduction to commodity trading. The bearish equivalent of the Morning Star is the Evening Star pattern.


A bullish reversal is signaled by the morning star candlestick, a triple candlestick pattern. It forms at the bottom of a downtrend and indicates that the downtrend is about to reverse. A candlestick chart with a long bearish candle, a short-lived bullish candle that gaps down from the first candle, and then a long bullish candle is what you want to find. Make sure the pattern is forming at the end of a downtrend or at the end of a consolidation period before trading it. A morning star candlestick pattern is reasonably easy to recognize.

We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data. Even with Bob Iger back as CEO, Disney faces headwinds—but the stock is a bargain for patient investors. Strengthen your investment strategy with independent research and powerful tools built just for investors. These undervalued stocks are among Berkshire Hathaway’s holdings in 2023.

Note the presence of doji/spinning top represents indecision in the market. If there is a gap between the first and second candles , the odds of a reversal increase. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. You should consider whether you can afford to take the high risk of losing your money.

The regular pattern is defined by two swing highs with a higher high between them. Triangles are among the most popular chart patterns used in technical analysis since they occur frequently compared to other patterns. The three most common types of triangles are symmetrical triangles, ascending triangles, and descending triangles.

How rare is a morning star?

The volume of this bar is greater than the volume of the previous bar. While it certainly is hard to know exactly why a market moves as it does, it indeed is good training to try and understand why. Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view.

Because the accuracy of this candlestick pattern in the side market is not high. In a sideways market, the Morning Star pattern can be used to trade the price reversal from the support end of the price range. If the pattern forms at the support end, it signals the beginning of a new upswing toward the resistance. It is an effective spring for taking long positions in a range-bound market. Look for the morning star candlestick to appear in a downward retrace of the primary uptrend for the best performance — page 603. If you arbitrarily sell 10 days after the breakout, you will find that the morning star after an upward breakout is the weakest performer.

  • The bearish equivalent of the Morning Star is the Evening Star pattern.
  • If the price is below SMA50 and SMA50 is below SMA200, this is a downtrend.
  • No matter your experience level, download our free trading guides and develop your skills.
  • The third candle confirms the reversal and can mark a new uptrend.
  • Any area of the trading industry, including stocks, forex, indices, ETFs and commodities, can exhibit morning star patterns.
  • An RSI rising from an oversold region following the formation of a Morning Star pattern around a support level confirms the bullish reversal signal.

Drilling down into the data, we find that the best average move 10 days after the breakout is a drop of 8.53% in a bear market, ranking 3rd for performance. I consider moves of 6% or higher to be good ones, so this is near the best you will find. That may sound like a lot, and it is, but it falls well short of the 5,000 or more samples that I like to see. In short, expect the decline to be less severe as more samples become available. Its formation signifies that traders are starting to worry about the downward trend and that some bulls are coming in.

Candlestick Pattern Trading #11: What is a Morning Star by Rayner Teo

The Morning Star is a bullish three-candlestick pattern signifying a potential bottom. It warns of weakness in a downtrend that could potentially lead to a trend reversal. The morning star consists of three candlesticks with the middle candlestick forming a star. Morning star patterns are generally seen as reasonably reliable indicators of market moves. They’re comparatively easy to spot, too, making them a useful early candlestick pattern for beginner technical traders. They’re comparatively easy to spot, too, making them a useful early candlestick pattern for beginner technical traders.

However, just letting the trend end when it ends instead of imposing a time limit shows that upward breakouts have better post-breakout performance than downward ones. That tells me the trend after the breakout from a morning star takes a while to get going but it tends to keep moving up. Patience is probably a good word for what you need when trading this candle pattern. Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors.


In that case, it indicates the end of a pullback and the start of the next bullish swing. The pattern also gives a strong signal for taking long positions if it forms at the support level of a ranging market. However, the pattern may not be as strong if it forms in a downtrend since it would go against the price momentum.

Technically, the third day candlestick in the chart above is not a large bullish candlestick; in fact it is yet another doji. An example of a morning doji star candlestick pattern is illustrated in the chart above of Apple . The morning doji star pattern follows a similar format to the morning star pattern with the exception of the second day candlestick being a doji rather than a small bullish or bearish candlestick.

Top 50 Most Viewed Stocks

It is the brightest object in the sky after the Sun and the Moon. Morning star candles that appear within a third of the yearly low perform best — page 601. Or if you’re ready to risk real capital, open your live account. The market should have now reversed, beginning a new uptrend. This happens mostly after a major news like interest rate decision, nonfarm payrolls, and manufacturing PMIs. Have a steady source of income like a salary and trade with capital that does not hurt your family needs.

Traders look at the size of the candles for an indication of the size of the potential reversal. The larger the white and black candle, and the higher the white candle moves in relation to the black candle, the larger the potential reversal. This script highlights modified version of evening and morning star candlestick patterns.