Morning Star

Morning Star

Morning Star

The so called morning star is a bullish candlestick pattern which consists of three candles: large red candlestick, small-bodied candle and large white candle. Generally speaking, candlestick patterns are one of the most useful patterns you can apply to your analysis of the market because once you have a few of them memorized, you can begin to work with them as a part of your active trading strategy. Having this in mind, in this article we will focus on trading through the use of morning star, which is considered to be one of the most easily identifiable patterns. Let’s go!

Morning Star | Pattern and Bullish Trend

As we’ve already mentioned earlier, a morning star is a candlestick pattern that consists of three candles and they have the following characteristics: the first bar is a large red candlestick located within a defined downtrend; the second bar is a small-bodied candle (red or white) that closes below the first red bar; finally, the last bar is a large white candle that opens above the middle candle and closes near the center of the first bar’s body. Not too complicated, right?

Traders should look at the second candle of the pattern to identify a bullish morning star (on the other hand, if there’s an opposite trend, then we call it the evening star). Price should attempt to dip and create a slightly lower low relative to the first candle. This “jump” should prop the price up closing the candle near the open for the day. You will probably often see a doji in this position, which usually suggests that bearish price momentum is about to expire. The last candle should show the beginning of a new bearish momentum. Among bullish and bearish engulfings, here you should be looking for a bullish one.

Morning Star | How to Use It

Most traders agree on the fact that it’s very good to combine a morning star with all kinds of Trend Indicators. That way you can get more accurate prediction of trend reversals and use charts properly, which has proven to be extremely useful when trading currency pairs. It’s one of the tools that acts in reality almost totally as it’s supposed to in theory, so it’s considered to be very reliable.

Always have in mind, though, that although the morning star is one of reversal patterns, it may not indicate a complete trend reversal, but just a simple change of direction.

Morning Star | Conclusion

Once you have familiarized yourself with the rules of identifying the morning star pattern, you can apply it immediately to your current trading strategy. It can be very useful in determining trend changes, especially when used in combination with other technical indicators. We are sure that this reliable tool will provide you with many important advantages on the market. With it, you will surely improve your trading skills and start making profit in the world of binary options right away!

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FURTHER READING:

1. The Little Book That Beats The Market (J. Greenblatt, 2006)
2. The Essays Of Warren Buffett: Lessons For Corporate America (W. E. Buffett, L. A. Cunningham, 1997)
3. Come Into My Trading Room: A Complete Guide To Trading (A. Elder, 2002)
4. Speculation spreads and the market pricing of proposed acquisitions  (Jan Jindraa , Ralph A. Walkling-2004)
5. The Greatest Business On Earth: A Simplified Guide To Trading Commodity Options (J. Prince, 2010)

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Author: Ben Prescott
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