What it looks like
Candle one is a long down candle in a fall. Candle two is small (a short body, either colour) and sits lower, usually with its body below candle one's close. Candle three is an up candle that closes above the midpoint of candle one's body. The pattern's low is usually candle two's low, and its high is the highest point of the three.
What it means
Sellers were in control on the first candle. The small second candle shows they could not push much further. The third candle shows buyers taking back more than half of the first candle. Sellers had been in control and this is where they were stopped. It is a sign the fall is tiring, not proof that it has turned.
How to trade it
- 1
Look for it after a fall, ideally at a floor or a level that already mattered.
- 2
Wait for the next candle to close above the pattern's high, then buy.
- 3
Example: on the gold 15 minute chart a morning star spans 12 points from its low to its high; the buy comes when the next candle closes above that high.
- 4
Put the stop just below the pattern's low, about 12 to 13 points in that example.
- 5
Target the nearest swing high or 2 times the stop.
A close below the pattern's low.
Where it works best
At the end of a clear fall into a floor such as a previous day low, a pivot or a round number, on 15 minute and higher charts.
WickSpeak finds the morning star automatically on any chart and names it on the candles that made it. Next to the name it writes what the pattern is, how to trade it and what proves it wrong, in plain English. In Playbook you can use the morning star, or any of the 146 patterns, as a condition alongside up to 12 conditions on any of 12 timeframes, then backtest it on past candles with your own costs.
Common mistakes
- Buying on the third candle before any close above the pattern's high.
- Taking it in the middle of a range where there was no fall to end.
- Accepting a third candle that closes below the middle of the first.
Related patterns
Questions traders ask
Is the morning star bullish?
Yes. It appears after a fall and shows sellers being stopped. It is a sign the fall is tiring, not proof it has turned, so wait for a close above the pattern's high.
What is the difference between a morning star and a morning doji star?
In a morning doji star the middle candle is a doji, where open and close are almost the same. The trade and the stop are the same for both.
Where should I put my stop on a morning star?
Just below the pattern's low, usually the low of the middle candle. A close below it proves the pattern wrong.
Does the middle candle need to gap?
Not on markets that trade around the clock, such as gold and forex. What matters is that the middle candle is small and sits low, and that the third candle closes above the middle of the first.