Morning Star

AAA

DEFINITION of 'Morning Star'

A bullish candlestick pattern that consists of three candles that have demonstrated the following characteristics:

1. The first bar is a large red candlestick located within a defined downtrend.
2. The second bar is a small-bodied candle (either red or white) that closes below the first red bar.
3. The last bar is a large white candle that opens above the middle candle and closes near the center of the first bar's body.

As shown by the chart, this pattern is used by traders as an early indication that the downtrend is about to reverse.

Morning Star

INVESTOPEDIA EXPLAINS 'Morning Star'

A morning star pattern can be useful in determining trend changes, particularly when used in conjunction with other technical indicators. Many traders also use price oscillators such as the MACD and RSI to confirm the reversal.

RELATED TERMS
  1. Relative Strength Index - RSI

    A technical momentum indicator that compares the magnitude of ...
  2. Reversal

    A change in the direction of a price trend. On a price chart, ...
  3. Bull

    An investor who thinks the market, a specific security or an ...
  4. Moving Average Convergence Divergence ...

    A trend-following momentum indicator that shows the relationship ...
  5. Candlestick

    A chart that displays the high, low, opening and closing prices ...
  6. Bar

    A graphical representation of a stock's movement that usually ...
RELATED FAQS
  1. How do I implement a forex strategy when spotting a Star Pattern?

    The three candlestick star patterns are commonly interpreted by traders and analysts as market reversal signals. Since all ... Read Full Answer >>
  2. How do I build a profitable strategy when spotting a Star pattern?

    The morning star and evening star candlestick patterns are interpreted by traders as market reversal signals. A profitable ... Read Full Answer >>
  3. How are Star patterns interpret by analysts and traders?

    Star candlestick patterns are relatively strong reversal signals. The morning star pattern occurs at the bottom of a downtrend ... Read Full Answer >>
  4. How effective is creating trade entries after spotting a Morning Star pattern?

    The morning star candlestick pattern is largely consistent in predicting a bullish reversal in a chart with a stable bearish ... Read Full Answer >>
  5. How do I Implement a forex strategy when spotting a Morning Star pattern?

    A forex trader can implement a low-risk trading strategy designed to take advantage of a possible bullish market reversal ... Read Full Answer >>
  6. How do I build a profitable strategy when spotting a Morning Star pattern?

    Traders have a couple of options for designing a trading strategy that takes advantage of a morning star candlestick pattern, ... Read Full Answer >>
  7. How are Morning Star patterns interpreted by analysts and traders?

    The morning star candlestick pattern can be an especially reliable indicator of trend reversal, though some signals are stronger ... Read Full Answer >>
Related Articles
  1. Active Trading

    Tales From The Trenches: Location Is Everything

    When a candle pattern re-occurs near a moving average, it may indicate future support or resistance.
  2. Charts & Patterns

    The Basic Language Of Candlestick Charting

    If you want to use candlestick charting to get a sense of where a stock is headed, you need to learn how to read this unique charting language.
  3. Charts & Patterns

    Candlestick Charting: What Is It?

    Discover the components and basic patterns of this ancient technical analysis technique.
  4. Forex Education

    Candlestick Charting: Perfecting The Art

    Take a look at continuation patterns and how they can confirm or deny trends.
  5. Charts & Patterns

    Candlesticks Light The Way To Logical Trading

    Crowd psychology is the reason this technique works. Find out how to make it work for you.
  6. Active Trading

    Star Formations Spotlight Luminary Trades

    Morning, evening and doji stars will have you basking in better trading profits.
  7. Chart Advisor

    Stocks Breaking to Downside - Time to Sell?

    These stocks have broken patterns or trendlines to downside, indicating more selling could be coming.
  8. Chart Advisor

    3 Ways To Trade The Bounce In Coal

    News from the Supreme Court has caused active traders to turn their attention to the coal markets. We'll take a look at how to trade the bounce.
  9. Chart Advisor

    How Investors are Profiting from Cyber Crime Fear

    An ETF that has seen significant gains this year in the growing field of cyber security, and the threat and fear of cyber attacks and cyber crime.
  10. Chart Advisor

    Buy These Stocks on The Pullback

    These four stocks are in upward sloping trend channels and have recently pulled back toward the bottom of the channel, providing a buying opportunity.

You May Also Like

Hot Definitions
  1. Social Security

    A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits ...
  2. American Dream

    The belief that anyone, regardless of where they were born or what class they were born into, can attain their own version ...
  3. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  4. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
  5. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
  6. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!