Morning Star |
Characteristic of Candlesticks: Reversal
Relevance of Candlesticks: Bullish
Prior Trend of Candlesticks: Bearish
Reliability of Candlesticks : 1st Grade
Confirmation of Candlesticks: Highly Reliable
Candlestick Patterns Key Reference |
Forex Chart (EURUSD)
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DESCRIPTION
The Morning Star is a bottom reversal pattern.
Its name is derived because, like the Morning Star (the planet Mecury) that fore-tells the sunrise, it presages higher prices.
Morning Star formation is one of the most reliable candlestick patterns for reversing from a downtrend to an uptrend.
PATTERN RECOGNITION
1. Morning Star pattern can be identified by a downtrend followed by a bottom reversal.
2. Refering to above diagram, firstly we will see a long bearish candlestick.
3. Secondly we will see a small candlestick (regardless of bullish or bearish candlesticks) followed by a gaps lower in the direction of the previous downtrend.
4. Finally we will see a long bullish candlestick that moves well within the first period's of the long bearish candlestick.
EXPLAINATION
Firstly we will see bearish candlesticks in a falling market suggesting that the bears are in command.
Secondly we will see a small real body appears which imply the incapacity of sellers to push the market lower.
Finally we will see a strong bullish candlestick of third session which proves that bulls have taken control.
An ideal bullish Morning Star pattern is prefered with a gap before and after the second session of the candlestick.
The second gap is rare, but lack of it does not take away from the power of this formation.
The 1st grade reversal patterns are the most reliable group of reversal patterns that seldom require any confirmation.
POINT TO NOTE
Stars are small candlestick at the bottom of downtrend which can more than one, two or even three.
The color of the star (bullish or bearish candlestick) and its gaps are not important.
The reliability of this pattern is very high, but we need confirmation in the form of a bullish candlestick with a higher close or a gap up is most suggested.
CANDLESTICK PATTERNS KEY REFERENCE
Irrespective of Color (Can be bullish or bearish) |
Uptrend |
Consolidation |
Downtrend |
ANTICIPATED DIRECTION OF TREND
Lighter Arrow = Lower Probability
Solid Arrow = Higher Probability
More Likely to go sideway, Less likely to rally
|
More likely to rally, Less likely to go sideways
|
More likely to go sideway, Less likely to fall
|
More likely to fall, Less likely to go sideways |
