The Morningstar candlestick pattern is a powerful signal that can indicate a potential reversal in the market. It consists of three candles, with the first one being a long bearish red candle, followed by a short bullish green or red candle indicating indecisiveness in the market. The third candle is a strong bullish green candle, preferably long, with a gap between the first candle close/second candle closing and the second candle close/third candle opening for a STRONG Morningstar pattern. All three candles have short to medium wicks on both sides, and the second candle is always the most important one. To confirm the pattern, other indicators should also be considered.
The first candle body is a bearish red candle, preferably long. The second candle is either a short bullish green or bearish red, which indicates indecision in the market. The third candle is a strong bullish green, also preferably long. A STRONG Morningstar pattern has a GAP between the first candle close/second candle closing and the second candle close/third candle opening.
Candle Wick / Shadow
All three candles have short to medium wicks on both sides. The second candle sometimes only has a wick above the candle body.
The Morningstar has three candles. The first red candle always precedes the second and last green candle.
The second candle is always the most important one. It can be bearish or bullish, as the focus is on indecisiveness and uncertain outcome regarding which of the two sides will come out on top. Morningstar’s are powerful on the daily timeframe. A downtrend must be in place and at the bottom, as Morningstar signals a potential reversal. Also, confirm with other Indicators.
It is scarce to have candle gaps in trading. Thus, it is accepted that as long as the Candle Body description and Modus Operandi are met, the pattern will be classified as a valid morning star pattern.