The Morning Star candlestick is a triple candlestick pattern which indicates a bullish reversal. It's formed at the bottom of the downtrend and gives us an indication that the ongoing downtrend is going to reverse. A Morning Star is a visual three-candle pattern with a low point on the second candle. 

In This Article 

• What is Morning Star? 

• How to analyse the chart using Morning Star? 

• How to use Morning Star on Keev? 

Category – Trend 

Type –Lagging

What is Morning Star? 

Morning Star is a candlestick pattern that indicates a major trend reversal which can shift the market sentiment. A Morning Star takes place after a downtrend and it signals the start of an upward movement in prices.

 A Morning Star candlestick pattern consists of three candlesticks. 

1. The first candle shall be bearish, and a longer one. 

2. The second candle is generally very small and can be bullish, bearish or neutral. 

3. The third candle is a strong bullish candle and confirms the reversal. 

Traders shall analyse the formation of Morning Star and seek confirmation about reversal. 

How to analyse chart using Morning Star?

Let's analyse the chart below of the S&P 400 Midcap exchange-traded fund (MDY). It shows an example of the Morning Star Bullish reversal pattern. 

The above chart of Midcap 400 depicts a strong strong bearish red candle on Day 1 of the Morning Star pattern. On Day 2 also we can find bearish sentiment by gapping down. But Day 2 was Doji, i.e a candlestick signifying indecision. Bears were hardly able to continue the large decreases of the previous day. They could close slightly lower than the open. 

Day 3 began with a bullish gap-up. The bulls were able to take hold of the Midcap 400 exchange-traded fund for the entire day. In addition to that Day, 3 was able to break the downward trendline that had served as a resistance for MDY for the past week and a half. Both trendline breaks and classic morning star pattern signal to go long.