Morning Star Candlestick Pattern: Trading strategy!🌟🕯️
✳️The Morning Star candlestick pattern is a candle formation that can often be seen on price action charts. It has a bullish character and can often determine the main minimum of market fluctuations.
✳️Three candles in a figure are one of the mandatory conditions of the pattern. Nevertheless, it is quite easy to find the morning star on the chart. It's easy to make sure of this – just look at the shape and location of the “Morning Star" figure.
⚠️The shape of the Morning Star pattern
So, the formation consists of three Japanese candlesticks. Each of them must meet certain requirements.
🔵 The first candle is a bearish one with a rather large body and the absence of wicks or their presence with a very small length (no more than 10% of the body);
🔵The second candle is with a small body or completely without it. The candle should be with small wicks. The color of the second candle does not matter;
🔵The third candle is bullish with a large body. The body of the third candle should cover most of the body of the first candle (or engulf the whole body). Also, the candle should be without shadows (ribose) or with very small shadows;
🔵There should be a gap between the central candle and the other two. But, as practice shows, it is not always a prerequisite.
❗Location of the candle model "Morning Star"❗
The morning star is a bullish formation. Therefore, it is located at the end of a downtrend. The central candle is the local minimum of the downtrend. After the formation of this Price Action pattern, you should buy an asset.
❗Signal amplification of the Morning Star model❗
🔴If the central candle was formed without a body, then the pattern gives almost 100% about the change of the downtrend to an uptrend. This model is also called the "morning star Doji" or "abandoned baby";
🔴The presence of a gap between the central candle and the other two candles strengthens the trading signal;
🔴The bullish central candle is stronger than the bearish one. But the strongest is bodiless;
The third candle completely covers the first candle;
🔴The presence of a small trading volume at the first candle and a large volume at the third candle strengthens the model.
✅When to enter into a transaction
We enter into the transaction after the closing of the third candle. It is confirmatory in the "Morning Star" pattern. This is a kind of guarantor of the model.
✅When not to enter into a transaction
Everything is simple here. If the pattern does not satisfy the main conditions, then we do not enter into the transaction. It will no longer be a morning star model, but something else.
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