The Morning Star Candlestick Formation
Over the past few days I’ve discussed Japanese candlesticks in forex price charts, today I will show you the first candlestick pattern, the morning star formation.
A morning star candlestick formation forms at the end of a downtrend (it’s the bottom), potentially signaling a reversal into an uptrend.
A morning star formation, which includes three or more candles, is characterized by a larger bearish candle, followed by a small-bodied bullish or bearish candle (a spinning top or a doji), followed by a larger bullish candle.
The morning star formation is a trend reversal signal. Three candles are necessary for form a basic morning star formation.
In order to qualify as a morning star formation, the third bullish candle must close at or above 60% of the original bearish candle’s opening (counting the bottom of the middle candle as 0 and the opening price of the original bearish candle as 1).
As you can see in morning star picture below, a morning star formation can consist of more than three candles.
A morning star formation with more than three candles
The defining characteristics are the initial larger bearish candle and a final larger bullish candle that closes at or above 60% of the initial bearish candle’s opening. In between those two candles can be a single doji or spinning top, or several.
You can confirm the morning star once the final bullish candle has formed.
If you identify a morning star and decide to trade it, buy at the opening of the candle that follows the morning star’s final bullish candle. Set your protective stop loss order at the last level of support (which will be the low of the morning star’s middle candle).
Trading morning stars can be particularly lucrative if you have a convergence (that is, the reversal implied by the morning star is further implied by a trendline or some other indicator).
In my next post, I will discuss the evening star japanese candlestick pattern. Hint: it’s just like the morning star only reversed. It will signals a trend reveral, but this time it reverses from an uptrend to a downtrend. After that, I’ll introduce the tweezer top candlestick pattern.
Related posts:
- The Evening Star Candlestick Formation
- The Tweezer Top Candlestick Pattern
- The Tweezer Bottom Candlestick Pattern
- Japanese Candlestick Patterns – Doji & Spinning Tops
- 8 Rules For Successfully Trading Candlestick Formations
Tags: candlestick formation, candlestick pattern, doji, morning star, morning star formation, reversal, spinning top, trend reversal Posted in
Rapid Forex on 
Larry on 
Dan Onzo on 
Rob on
March 2nd, 2010 at 4:33 pm
Love the morning star! I’m always seeing them when trading forex. If anyone else sees this post, make sure you get this concept!
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March 12th, 2010 at 4:51 pm
I’m starting to make some connections. I’ve been going back & forth between some of your posts. This looks like it’s connected with Fibonacci. I mean, doesn’t the morning star retrace to near the Fibonacci level?
If so, what’s the point of learning two different ideas?
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Rapid Forex
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March 13th, 2010 at 6:25 am
James,
That was a good thing you spotted. Yes, it does look like a Fibonacci on that scale. The point of learning both is that you see it from two different ways. Fibonacci becomes useful for more than just a morning star formation. I’m glad you saw that, you’re a sharp guy!
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March 15th, 2010 at 4:57 pm
Excellent way of defining the end of a downtrend. Is there a such thing as a fake morning star (aka false alarm?)
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March 23rd, 2010 at 6:59 am
Thanks, Brian!
I’m learning more about candle formations and the more I learn, the more I realize that we ignore them at our peril!
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Rapid Forex
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March 23rd, 2010 at 7:22 am
@Milowena – great observation!
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May 19th, 2010 at 12:33 pm
Does it matter what time your seeing the mourning star. 5 mimute, 4 hours, daily or anyother time period.
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Rapid Forex
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May 20th, 2010 at 10:20 am
@John – the morning star works for any/all time periods. If you see it on a chart, it’s relevant for that time period. For instance, if you see a trend on a daily chart that lasts for 3 months, the morning start could be signaling a reversal on that trend that could last a few months. On the same currency pair, you may see a morning star on a 5-min chart at the end of a trend that lasted an hour. This would mean that there could be a 5-min-chart trend in another direction for the next few hours. Does this make sense?
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September 25th, 2010 at 4:16 am
Brian,
I’m new to Forex trading and my primary question is what timeframe do you use to set up your trade. Should I be using 5, 15, 30 minutes, 1 hour or daily charts?
Regards,
Pat
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Rapid Forex
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September 25th, 2010 at 7:01 am
@Patrick – I primarily use 1-hr & 4-hr charts.
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December 10th, 2011 at 6:36 am
Thanks Brian, very clear information.
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