The Morning Star candlestick pattern is used to recognize a bullish reversal point, also known as the bottom of a downtrend. From there you will easily set a Buy/Up trade.
Morning Star Characteristics
While the Evening Star candlestick pattern seeks a downside reversal, the Morning Star is a sign that only occurs at the end of a downtrend to find a bullish point. Similar to the appearance of Morning Star, the bright time of Venus (morning star) at dawn. It was a dark sky with the Venus blazed flash and then the sky became light enough to clearly distinguish it from land and water. Morning Star model includes:
- Candle 1: Long bearish candlestick.
- Candle 2: A Doji or very short bullish/bearish candlestick.
- Candle 3: Long bullish candlestick, but the closing price is inside the body of candle 1.
The Morning Star candle is usually the end of a downtrend. Rarely happens, but hit probability up to 80%. The best time to open a trade is to end candle 3 or as soon as possible. We need to carefully consider when the Doji appears.
Open transaction when meeting Morning Star pattern
You will see this pattern at the end of a downtrend. Most Traders who meet the Morning Star are to enter an Up/Buy.
When the market was steadily growing, then a Doji appeared followed by a long bullish candle, the Morning Star pattern appeared. It should be noted that the 1st and 3rd candles in the pattern are long candles if the short one is invalid.
If you are trading FTT, you use 1-minute candles then set a 5-minute order, if you use a 5-minute candle, you should place a 30-minute, 60-minute order.
This pattern is easy to confuse if you do not miss the following:
- The Morning Star pattern occurs at the end of a downtrend.
- Candle 1 should be a long body candle.
- Candle 2 is a Doji or a very small Up / Down candle.
- Candle 3 should be a bullish candle with a long body, but the close remains inside candle 1.
- If the long 3-day candlestick breaks through the 1-day candlestick, you need to consider using other indicators, patterns, and tactics to see if there is a big move imminent.