What is Morning and Evening Star pattern?

Morning Star Candlestick Pattern

This is a reversal pattern that is found at the bottom of a downtrend.

The pattern consists of three candles.

 Before We Look Into The Candles, We Must Be Aware Of The Following Terminologies

Bullish: When the commodity price closes above the open price.

Bearish: When the commodity price closes below the open price.

1st candle – Long and bearish candlestick

2nd candle – Small and indecisive candlestick

3rd candle – Long and bullish candlestick

The illustration chart above displays the Morning Star and Evening Star candlestick pattern.

When Is Morning Star Pattern Found?

1st candle: When a downtrend occurs, heavy selling takes place due to pessimism. (this is when the first candle forms) – It is long & bearish in nature.

2nd candle: The indecision between buyers & sellers gives rise to the second candle. – It could be a small candle or a Doji.

3rd candle: The anticipation of positive commodity news gives rise to the third candle. – It’s long and bearish.

A change in trend occurs when there is an increase in volume and commodity price.

 Evening Star Candlestick Pattern

This is a reversal pattern that is found at the top of an Uptrend.

The pattern consists of three candles.

1st candle – Long and bullish candlestick

2nd candle – Small and indecisive candlestick

3rd candle – Long and bearish candlestick

When Is Evening Star Pattern Found?

1st candle: When Uptrend occurs, heavy buying takes place due to pessimism. (this is when the first candle forms) – It is long & bullish.

2nd candle: The indecision between buyers & sellers gives rise to the second candle. – It could be a small candle or a Doji.

3rd candle: The anticipation of negative commodity news gives rise to the third candle. – It’s long and bearish.

A change in trend occurs when there is an increase in volume and a decrease in commodity price.

 Inference From Morning And Evening Star Pattern

Both the patterns are used to identify a trend.

The Morning Star pattern can be treated as a Buy signal.

The Evening Star pattern can be treated as a Sell signal.

During an uptrend, high optimism causes heavy buying. The first candle forms. It’s long and bullish. The indecision between the buyers and sellers forms the second candle. It’s a small candlestick—or a Doji. The expectation of negative commodity news in the market forms the third candle. It’s long and bearish. When the volume increases and the price decreases, it suggests a change in trend.

These patterns are used for trend identification. The Morning Star pattern is used as a buy signal. The Evening Star is used as a sell signal. It’s advisable to use a combination of patterns and indicators to determine your trading strategy.

To ensure that our trading strategy is effective, it’s always recommended to mix and match the patterns and indicators.