When fear looms over traders, and prices seem to be sinking, the 'Morning Star' quietly appears, heralding a new rise in the market… and signaling a strong return of buyers. It is not just a candle, but a profound psychological signal of trend reversal.
What is the Morning Star?
A bullish reversal pattern consisting of 3 consecutive candles:
🔴 First Long Bearish Candle: Represents the strength and control of sellers.
⚪ Second Small Candle (could be Doji or small-bodied): Indicates a slowdown in selling momentum and the emergence of indecision.
🟢 Third Long Bullish Candle: Starts with a gap up and closes above the midpoint of the first candle — a strong buying signal.
What does this candle mean?
It shows that sellers are starting to lose control, and buyers are gradually coming back, which may be the beginning of a reversal from a downtrend to an uptrend.
When is it effective?
When it appears at a downtrend bottom or after a sharp decline.
When formed at a strong support or with oversold conditions in the RSI.
Its strength increases if supported by high trading volumes.
Trading Strategy:
✅ Enter after the close of the third candle.
🛑 Stop loss below the lowest point of the pattern.
🎯 The first target at a nearby resistance, or at a risk-to-reward ratio of 1:1.
Summary:
The Morning Star is not just a chart pattern, but a moment of transformation in the market's mindset: from despair to hope. It is one of the strongest reversal signals in classical analysis, especially when it aligns with other support indicators.
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