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A powerful three-candle reversal pattern that signals the end of a downtrend, like the morning star planet heralding the sunrise.
The Morning Star is a three-candle bullish reversal pattern that appears at the bottom of a downtrend. It consists of a large bearish candle, followed by a small-bodied "star" candle that gaps down, and finally a large bullish candle that closes well into the first candle's body.
The pattern gets its name from the planet Venus, which appears in the sky just before sunrise - hence "morning star" heralds the coming of a new day. In the same way, this candlestick pattern signals the potential end of bearish darkness and the beginning of a bullish dawn.
The Morning Star tells a three-act story of sentiment shift. Act One (Candle 1): Sellers are firmly in control. The large bearish candle shows conviction - price closes near its low, momentum is clearly bearish, and there's no sign of buyers.
Act Two (Candle 2): The star gaps down, showing initial continuation. But something changes. Despite opening lower, sellers can't make progress. The small body shows *indecision* - the first crack in bearish confidence. Volume often decreases as selling pressure exhausts.
Act Three (Candle 3): Buyers strike with conviction. The large bullish candle gaps up or opens near the star's close and pushes aggressively higher. By closing into Candle 1's body, buyers demonstrate they've *reclaimed control*. The reversal is complete.
Conservative: Enter on a break above Candle 3's high, confirmed by continued bullish momentum.
Aggressive: Enter at the close of Candle 3 if it penetrates deeply into Candle 1's body (50%+).
Place stop below the low of the star candle (Candle 2). This is the pattern's invalidation point - if price returns below the star, the reversal failed.
T1: Previous swing high or nearest resistance level. T2: Measured move equal to the pattern's height (Candle 1 high to star low) projected upward. T3: Use trailing stop on 50% position for extended moves.
Minimum 1:2 R:R required. Morning Stars often offer excellent R:R because the stop (below star) is relatively close while upside potential is substantial.
A Morning Star is only as good as the context it appears in. The same three-candle formation can be a high-probability reversal signal or noise - the difference is where it forms and what surrounds it.
Volume tells the truth. The third candle should have noticeably higher volume than the first two - this confirms real buying pressure, not just a dead cat bounce.
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