# Trade the Morning Star Pattern: A Bullish Reversal Strategy

## What Is a Morning Star?

A Morning Star is a bullish [candlestick](https://www.investopedia.com/terms/c/candlestick.asp) pattern recognized by traders for signaling a potential trend [reversal](https://www.investopedia.com/terms/r/reversal.asp) in a downtrend. Comprised of three distinct candles, it indicates the start of an upward climb. Technical analysts use additional indicators to confirm the shift, making it a pivotal tool in trading strategies.

### Key Takeaways

*   A morning star is a bullish candlestick pattern that signals a possible reversal from a downward trend.
*   The morning star pattern consists of three candles: a tall black candlestick, a smaller candle indicating market indecision, and a tall white candlestick confirming the reversal.
*   Traders look for volume increases, especially on the third day of the pattern, to confirm the strength of a morning star.
*   The opposite of a morning star is an evening star, signaling the start of a downtrend after an uptrend.

## Deciphering the Morning Star Pattern

A morning star is a visual pattern, so there are no particular calculations to perform. A morning star is a three-candle pattern with the low point on the second candle; however, the low point is only apparent after the close of the third candle.

Other technical indicators can help predict if a morning star is forming, such as whether the price action is nearing a support zone or whether or not the [relative strength indicator](https://www.investopedia.com/terms/r/rsi.asp) (RSI) is showing that the stock or commodity is oversold.

Here is what a morning star pattern looks like:

![Image](https://www.investopedia.com/thmb/CQsbUF6M7pfRPqxjCZr8thBVYSI=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/dotdash_Final_Morning_Star_Definition_Jun_2020-01-a6d5241bc649403aa86f394d5a2430a7.jpg)

**

The chart above has been rendered in black and white, but red and green have become more common visualizations for candlesticks. The important thing to note about the morning star is that the middle candle can be black or white (or red or green) as the buyers and sellers start to balance out over the session.

## How to Trade the Morning Star Pattern Effectively

Morning star patterns signal the start of a trend reversal from bearish to bullish. They gain importance when supported by other [technical](https://www.investopedia.com/terms/t/technicalanalysis.asp) indicators. Another important factor is the volume that is contributing to the pattern formation.

Generally, a trader wants to see volume increasing throughout the three sessions making up the pattern, with the third day seeing the most volume. High volume on the third day is often seen as a confirmation of the pattern (and a subsequent uptrend) regardless of other indicators.

A trader will take a bullish position as the morning star forms in the third session, moving with the uptrend until signs of another reversal appear.

## Comparing Morning Star and Doji Morning Star Patterns

The morning star pattern has a variation. When the middle candlestick is flat, it forms a [doji](https://www.investopedia.com/terms/d/doji.asp). This small candlestick, similar to a + sign, highlights market indecision better than a thicker middle candle.

The appearance of a doji following a black candle will generally see a more aggressive volume spike and a correspondingly longer white candle due to more traders being able to clearly identify a morning star forming.

## Understanding Differences: Morning Star vs. Evening Star

The opposite of a morning star is an evening star. It consists of a long white candle, a short black or white candle, and a long black candle descending past half the white candle's length. This pattern signals an uptrend reversal, with bulls giving way to bears.

## Recognizing the Limitations of the Morning Star Pattern

Relying only on visual patterns can be risky. A morning star is most effective when supported by volume and other indicators, like a support level. Without these, it's easy to mistakenly see morning stars in any downtrend.

## What Is the Difference Between Technical Analysis and Fundamental Analysis?

Both technical analysis and fundamental analysis are used by traders and investors in picking an investment as well as when to enter and exit the investment. Technical analysis uses historical data, mainly price and volume data to chart and predict an asset's future movements. Fundamental analysis aims to understand intrinsic value by analyzing economic and financial factors, such as the information found in a company's financial statements and how the macroeconomy will impact an asset.

## Is a Morning Star Pattern Bullish?

Yes, a morning star pattern is bullish. It signals a weakness in a downtrend that may result in a trend reversal, which would be the start of an increase in an asset's price.

## How Reliable Is a Morning Star Pattern?

Generally, a morning star pattern is very reliable, especially if it is incorporated with other technical indicators and further analysis of the asset. It is also a pattern that is helpful to both beginner and professional traders.

## The Bottom Line

The Morning Star pattern is a visually recognizable bullish candlestick formation that suggests a potential trend reversal from bearish to bullish, typically following a downtrend. It consists of three distinctive candlesticks: a tall bearish one, followed by a small-bodied candlestick that indicates market indecision, and a tall bullish candlestick that confirms the reversal. For traders, it's essential not only to identify this pattern but also to seek confirmation through additional technical indicators such as support levels or increased trading volume. While the Morning Star pattern is a reliable bullish signal, especially when backed by further analysis, traders should remain cautious and consider various factors before making trading decisions.