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. Red Candlestick

    The component of a candlestick chart that represents a downward ...
  2. Reversal

    A change in the direction of a price trend. On a price chart, ...
  3. Tri-Star

    A type of candlestick pattern that signals a reversal in the ...
  4. Evening Star

    A bearish candlestick pattern consisting of three candles that ...
  5. Moving Average Convergence Divergence ...

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

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

    Consider Buying These Uptrending Stocks

    Recent pullbacks in these uptrending stocks present an opportunity to get long for another possible rally.
  8. Technical Indicators

    Use Volume And Emotion To Tackle Topping Patterns

    Selling short in a topping pattern offers an advantageous reward-to-risk profile, but it can be hard to find good entry prices.
  9. Trading Strategies

    How to Do the Fundamental And Technical Combo Trade

    Fundamental and technical analyses should be viewed as complementary rather than competing practices. When combined, these two methods can greatly strengthen your game.
  10. Mutual Funds & ETFs

    How To Apply Technical Indicators To Mutual Funds

    Mutual funds do not readily lend themselves to technical analysis, but investors can use common indicators to evaluate mutual funds as easily as stocks.

You May Also Like

Hot Definitions
  1. Loan-To-Value Ratio - LTV Ratio

    A lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage.
  2. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  3. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  4. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  5. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  6. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
Trading Center