Morning Star Pattern & How to Trade With Them?| My Espresso

Morning Star Pattern

A Morning Star Pattern is a candlestick pattern that is visually appealing, and the three candlesticks are interpreted through technical analysis as bullish reversal signs. It may not be associated with technical trading, but the truth is that the Morning Star Candlestick Pattern indicates a trend reversal when there is a downtrend and is indicative of the start of an upward climb.

Published on 03 March 2023

This pattern is a sign of a reversal from the previous price trend. Traders look for Morning Star Pattern formation and, after that, seek confirmation that a reversal trend is occurring, which is done using additional indicators.

This article will tell you everything about the Morning Star Pattern in trading.

What is a Morning Star Candlestick Pattern?

A Morning Star Candlestick Pattern has three candlesticks and signals the start of an upward movement in prices. Traders must analyze the formation of a Morning Star Pattern and seek confirmation that a reversal order is in trend and confirmed.

This type of candlestick trading works well in every financial market. However, candlestick trading is more commonly used in the cryptocurrency market. However, the cryptocurrency market is still emerging compared to the traditional Forex or stock markets. In these markets, investors face a lack of sufficient prior data for analysis. Nonetheless, for most top-tier crypto coins, some data is available to easily apply the candlestick analysis.

The Morning Star Pattern Stocks are generally used for technical analysis as they provide somewhat similar prices to other formations like the Doji, hanging man, and evening star.

Characteristics of a Morning Star Pattern

Occasionally, this reversal pattern develops at a support level or at the bottom of a downtrend, which provides the maximum accuracy when trading long-term. This is because financial markets move in a zigzag pattern by creating swing lows and highs.

  • When the prices move back from the swing level, it ends up leaving signs that the prevailing trend is near its end and a new/fresh trend is about to start. As for the Morning Star Pattern, the same theory applies to it.
  • The Morning Star Pattern represents a story regarding the market. In these markets, the buyers remain active on Day 1. On Day 2, the prices open with a downward gap, indicating that sellers are aggressive and active. However, the sellers, at the end of the day, rarely make a new low, indicating that they are losing momentum. It is a significant sign of a forthcoming Morning Star Candlestick Pattern.
  • A strong bullish candle is observed on the third candle, eradicating the bearish price of Day 2.
  • Day 3 starts with a bullish pattern and closes higher.

The common aspects of the Morning Star Pattern are:

  • The Morning Star Candlestick Pattern is a bullish pattern appearing at the bottom of a downtrend.
  • This pattern with a strong support level has the topmost chance of working out.
  • This pattern is booming if the Day 3 candle is relatively more significant than Day 1.
  • Lastly, Day 2 must open with a bearish gap and Day 3 with a bullish gap.

Using the Morning Star Pattern to Trade

The Morning Star Candlestick Pattern is a visual indicator of a trend reversal but must be grouped with other trend indicators. Furthermore, volume is an essential factor. As the volume increases through the course, Day 3 sees the most volume. Irrespective of other indicators, if high volume along with an uptrend is observed, the pattern is confirmed. When the formation is complete, traders enter at the next candle opening and thus ride the uptrend.

In fast-changing markets, you can enter the market without any delay. Maintaining an optimistic risk-to-reward ratio is beneficial since the market comes without any guarantees.

However, as a trader, you must not rely solely on these visual patterns, as they can be risky.

Trading strategies use the relative strength index and Bollinger bands. Whenever a morning star is backed up by technical indicators such as support level and volume, it confirms the signal. However, as mentioned above, there is always a word of caution. One should not trade solely on visual patterns. In volatile market conditions, there are high chances of being stopped at break-over. Hence, it is crucial to do extensive research and a demo to test the effectiveness of this Morning Star Candlestick Pattern.


Therefore, a Morning Star Candlestick Pattern is formed at the downtrend’s bottom and gives a warning sign that this ongoing trend is going to reverse soon. It is imperative that traders analyze the formation of a Morning Star Candlestick Pattern and thus seek confirmation of a reversal trend using technical indicators.

A sudden market crash with a downtrend or an uptrend can happen in no time. Therefore, be disciplined with your risk management strategy and always take other technical indicators into consideration.

Chandresh Khona
Team Espresso

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