What is a Morning Star Candlestick Pattern?
The Morning Star Candlestick Pattern is a bottom reversal signal that consists of three candles and occurs after an extended downtrend. The first candle is a long black candlestick. The second candle gaps down, but the trading range is small, giving it a small real body. This warns of the potential for a reversal. The third is a white candle that closes above the midpoint of the first day. The deeper this candle moves into the body of the first candle, the more powerful the signal. It is the opposite of the Evening Star candlestick pattern. Since the third candle retreats deep into the first candle, no other confirmation is needed, but when it bounces off support or is accompanied by a sell signal from an indicator it is much more reliable. When you see this candlestick pattern occur its time to sell or short the stock.
