Three distinct candles tell the story: sellers in control, then a moment of balance, then buyers taking over completely.
What is a Morning Star?
The Morning Star is a three-candle pattern that marks the potential end of a downtrend. Like the morning star (the planet Venus) that appears just before sunrise, this pattern signals that the darkness of a downtrend may be about to give way to a new upward move.
Candle 1: A large red candle continuing the downtrend — sellers are still dominant.
Candle 2 (the “star”): A small-bodied candle (can be green, red, or a Doji) that gaps down from the first candle. It shows that selling momentum has stalled — neither side is in control.
Candle 3: A large green candle that closes well into the body of the first red candle, confirming buyers have taken over.
Why It Works
The pattern works because it demonstrates a complete three-stage power shift. The first candle shows sellers in full control. The star candle shows that the selling pressure is drying up — buyers and sellers are at a standstill. The third candle confirms that buyers have won the battle and are now driving price upward.
The key requirement for the third candle is that it closes at least halfway into the body of the first red candle. The deeper it penetrates, the stronger the reversal signal.
How to Trade It
- ✓ Enter on the close of the third (green) candle or on the open of the fourth candle.
- ✓ Strongest when the star candle gaps away from both the first and third candles.
- ✓ Even more powerful when it forms at a major support level.
- ✓ Look for increasing volume on the third candle to confirm buying conviction.
- ✗ If the third candle closes less than halfway into the first candle’s body, the signal is weaker.
- ✗ Don’t trade it without a prior downtrend — it needs something to reverse.
Stop loss: Below the low of the star (middle) candle — this is the key support level the pattern is built around.