Morning Star Pattern: How to Identify a Bullish Reversal in Crypto

The opposite occurring at the top of an uptrend is called an evening star. Also, you should also learn other patterns to use them together with the morning star. In this case, you should look at a situation when the chart is forming lower highs and lower lows. While you might be tempted to buy an asset after seeing this arrangement, it is recommended that you do more analysis. For example, you could do a multi-time analysis to identify the overall trend.

• An Evening Star pattern, on the other hand, consists of a large bullish candle followed by a small-bodied candle and then a bearish candle.
• In a morning star pattern, the small middle candle is between a large bullish candle and a bearish candle.
• Price breaks out upward when it closes above the top of the candlestick pattern.
• Make sure the pattern is forming at the end of a downtrend or at the end of a consolidation period before trading it.
• Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors.
• What I’ve just shared with you in this candlestick series training video is the ideal textbook pattern.

The broker is headquartered in New Zealand which explains why it has flown under the radar for a few years but it is a great broker that is now building a global following. The BlackBull Markets site is intuitive and easy to use, making it an ideal choice for beginners. They have a Doji, telling you that buyers and sellers are in equilibrium. As a rule of thumb, the higher the number of days involved in a pattern, the better it is to initiate the trade on the same day. If you’d like a primer on how to trade commodities in general, please see our introduction to commodity trading. From beginners to experts, all traders need to know a wide range of technical terms.

How to trade with the Morning Star Pattern

Fourth, a significant increase in volume on the third trading day is typically interpreted as a validation of the pattern (and a future upswing). There are a few essential factors you need to keep in mind while trading with a Morning Star pattern. https://www.bigshotrading.info/blog/morning-star-candlestick-pattern-spotting-reading/ First, it is essential to note that the volume has been increasing steadily during the course of the pattern’s three sessions. The material provided is for information purposes only and should not be considered as investment advice.

For example, you may review our Indicator Library categories for momentum oscillators or trend analysis. More information on combining candlestick patterns with other technical indicators available https://www.bigshotrading.info/ here. For the best performance from the morning star candlestick, look for it when the primary trend is rising. Then the morning star appears as part of a downward retrace of that uptrend.

Top Financial Assets to Trade during Exceptional Events

We used the volume indicator to help confirm the overall pattern and it played a crucial role in the easy-to-follow strategy that we proposed in this article. Ideally, the best pattern is where the bullish (third) candle closes above these highs of the first candle. The information does not represent an offer of, or solicitation for, a transaction in any investment product. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”. We introduce people to the world of trading currencies, both fiat and crypto, through our non-drowsy educational content and tools. We’re also a community of traders that support each other on our daily trading journey.