It is three candlestick pattern signifies a bullish reversal. It is formed during a downtrend where bears begin to give way to bulls. The pattern in a downtrend is made up of three candlesticks, a long bearish candle, middle, a bearish or bullish Doji or short bullish candle and third followed by a long bullish candle.
For confirmation of bullish reversal, successful traders look at the height of third long bullish candle to be at least halfway up the body of the first bearish candle. To identify the trend, traders have to look at the following criteria:
- Before the formation of the morning start, the price must be in a downtrend.
- The first candle must be a long bearish candle, which shows that bears have full control over the market price of security or stock.
- The second candle can be a short bullish candle or bearish Doji which convey a state of indecision that buyers and sellers are fighting for market control.
- The third candle must be-long green or white candle, which indicates a bullish reversal. It must be half up the price or height of the first bearish candle. The last candle confirms the bullish reversal.
Trading purely based on morning star candlestick pattern can be an unsafe plan. It can be fruitful when backed up by support level, other indicators and volume.
Opposite of morning star is the evening star, which formed during a strong uptrend. It is a strong indication of bearish reversal.