Morning Star Candlestick Pattern: Spotting & Reading

Morning Star Candlestick Pattern: Spotting & Reading

In trading, it’s very important and beneficial to memorize patterns of candlesticks. The good thing about them is that they reoccur often enough. If you know how to spot one, you’ll be able to anticipate the next step before it happens. You shouldn’t try to memorize all of them, but learning the most commons ones is mandatory.

Lucky you, the ‘Morning Star’ is one of the most common candlestick formations. Like many other it signifies a reversal of a trend. Basically, when it happens, it will turn a bearish price movement into a bullish one. Like many still, it’s only a bullish pattern – meaning it will only result in a bullish trend if done right.

Spotting Morning Star

Morning Star candlestick pattern occurs in the culmination of a downward trend and is followed by a rising upward trend. If you aim to trade frequently and look at the graphs on a regular basis, you’ll be seeing this one a lot. For amateurs, that would be just generic group of candlesticks. 

Morning Star Candlestick Pattern: Spotting & Reading

But even if you weren’t told about the Morning Star, you could put 2 and 2 together and see how it works. Still, it’s better to be prepared. 

Morning Star consists of 3 candlesticks:

  1. The first candlestick – a long bearish candle
  2. The middle candlestick – a short bearish candle with longer wicks
  3. The third candlestick – a long bullish candle, often on par with the first candle

It looks like a small dot sprouting up from the very bottom – much like the stars that go over the horizon only in the morning.

So, if you were to make profit out of it, it would be prudent to enter the market on the fourth day (after the third candlestick is shown in full), on the third day (if you’re watching the progress and are sure the trend is going full bullish) or on the second day if you’re absolutely sure the trend is going to reverse.

It depends on your own expectations, skill at predicting these things, as well as your desire to risk as little as possible.

Logic behind Morning Star

The pattern can be caused by many various things, but the general idea is that Morning Star is caused by the trend slowing down during the second stage and then straightening out into a completely opposite direction. 

The Star is usually preceded by a deep fall. It often leaves the supply of the traded security too big, which leads to the lack of demand and the increase of value. This change of mood happens during the second day, although it doesn’t always mean that the trend is about to change.

That’s why you shouldn’t enter the market immediately and instead wait for the third day. If it’s a strong bullish candle, then it will act as a confirmation for the Morning Star. 

The only problem with waiting for the confirmation is that you’re not the only one. Again, this is an extremely common pattern. If it works, a lot of people who don’t even know what a Morning Star candlestick pattern is will notice that the winds have changed and hop onto the new trend.

In this new market, the demand may be off-the-charts, and you’ll simply be unable to buy the security early enough. You can try and estimate whether the Star is going to result in the bullish turn or not.

Reading Morning Star

The Morning Star candlestick pattern is almost like a Doji pattern – it’s a small candle that signifies a reversal. The difference being, a lot of the Doji candles aren’t reliable and will prove continuation as much as reversal. 

Morning Star is a bit different. It will not appear just anywhere and there aren’t as many price swings inside the daily period of the candle itself. The Star is not indecisive, like Dojis – the bearish traders simply can’t push any further and are forced to give into the bullish trend.

This happens because this pattern is almost always in the bottom of the trend, meaning it’s close to the support zone.

The support zone is a floor of the graph. Naturally, for any security, the floor would be different – some like to fluctuate over time a lot more than others. But the price will still have to turn around once it drops low enough. It’s not magic – it’s just a combination of supply, demand, volume and other factors.

You can roughly find where the support zone starts, although there aren’t specific markets for it. There are several ways, however:

  1. Use pivot points. Pivot points allow you to see where the most likely support and resistance points are. The closer Star gets to them, the more likely it is to prove true
  2. Just use your eyes. See an extended graph and look where the security found support before. If this time the Star is on the same level, it’s likely that it’s going to happen again

There are also other indicators and tools, and you are generally advised to use as many as you can, considering you can read them. But for starters, you can just use the combination of pivot points, your own feeling and the intraday readings on the third day.

Evening Star

You guessed it: just like Morning Star candle, there is also Evening Star – a pretty similar mirrored version. It has a similar structure, logic and is just as common as its Morning variant. You can pretty safely apply the same advice you learnt here to dealing with this bearish pattern.

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Written by:


Carolyn Huntington is an economist, professional trader, and analyst. She made her first big deal in her student years with a profitable investment in Facebook stock. Now the total experience of her trade is 18 years. Over the years of trading, Carolyn has developed its own strategy that allows even those who have never traded on the stock exchange before to earn money. She also creates market forecasts and advises major shareholders, compiles investment portfolios, and teaches how to work with automated advisors.

telephone: 503-547-5192