The Morning Star

The Morning star is a three-candle formation. It is an extension to the Bullish star pattern that we discussed earlier.

The third candle appearing after the bullish star pattern opens above the body of the middle candle. It closes higher and within the body of the first candle. This formation is known as The Morning star.

The Morning star is a bullish trend reversal pattern. Higher the size and body of the third candle, stronger it is. The bullish star pattern suggests that the bears are losing the momentum. A strong bullish candle followed after it indicates that bulls have gained the momentum. The momentum is shifted to bulls.

The pattern is formed by combining 3 consecutive candlesticks. The morning star appears at the bottom end of a down trend.

Ideal Morning star pattern would have shadow gaps between the candles. But it is very rare to find idea Morning star pattern. In real life, we need to be flexible with this requirement. The body gap between the candle would be sufficient to call it a Morning star pattern.

We should consider it as a Morning star pattern even if there is no gap between last two candles and other criteria are met. It is important to understand the essence of the pattern.

Click here to learn more about the pattern.

This pattern can be plotted on the chart by adding it from the study menu in TradePoint & RZone. The pattern is also available in the system builder section. By combining this pattern with other patterns and indicators, you can create your own trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

 

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