Definition
Bullish Morning Star consists of three candles and signals the end of an inclining trend. The first candle is long and black. The colour of the second candle is irrelevant, but it must have a gap in the direction of the trend. These two candles form a Basic Star formation. The third is a white candle, which closes in the body of the first candle. The last candle signals the reversal.
- Trend: Reversal
- Expected trend: Bullish
- Previous trend: Bearish
- Reliability: High
- Type: Bullish
- Number: 3
Recognition
- The market is in a downward trend.
- The first day is a long black candle.
- The second day is a short candle with a gap in the trend’s direction.
- The third is a white candle, closing in the body of the first candle.
Interpretation
This pattern is formed usually at the end of an inclining trend. After the long black candle, the trading starts with a downward gap on the next day. There is a small trading volume on the second day. Its candle can be both white and black. The trend reversal is confirmed by the white candle on the third day, when the gap between the first two days also gets filled out.
Important factors
The number of the Dojis can be one, two, or three. The colour and the gaps of the star is not important. The formation is highly reliable, but a confirmation is necessary (may come from a white candle with higher closing price or gap).
