The morning star pattern

Posted by Scriptaty | 8:29 PM

A morning star is a bullish candlestick pattern that appears at the end of a downward price swing. An ideal morning star is a three-candlestick pattern. The first candle is a long bearish candle; the second is a small-bodied “spinning top”-like candle (white or black) that can gap below the body of the previous bearish candle; and the third is a long, bullish candle that closes well into the first bearish candle’s body.

The first long bearish candle confirms the strength of the downswing. The subsequent small real body candle suggests the bears have, at least temporarily, lost their power to push prices lower. Finally, the long, bullish candle shows the bulls have gained control of the market, indicating a high probability of a reversal and rally.

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