Morning Star

The “morning star” is the inverse of the evening star, a 3-bar pattern in which the “star” is a small-bodied candle, typically opening at the close of the previous candle or opening a gap below it, indicating that a trend is transitioning from bearish to bullish. The morning star constitutes a potential bottom to the preceding bearish leg, and functions therefore as a buy signal. The three candles are as follows:

1. A long bearish candle
2. A small-bodied bullish or bearish candle or a doji that opens at or below the close of the previous candle
3. A white bullish candle that opens at or above the high point of the previous candle and closes at or above the center of the first candle.

While an evening star pattern after an uptrend signals a reversal, the opposite a morning star pattern in a downtrend can also signal reversal, and a change in the balance of power between bears and bulls.