Morning Star
A three-candle reversal pattern that forms after a decline. A large red candle is followed by a small-bodied candle, and then by a green candle that closes past the middle of the first candle's body. It can signal that selling pressure has stalled and buyers are starting to step back in.
How it forms
- It follows a clear decline. Since it is a reversal signal, there needs to be a move to reverse.
- Candle 1 is a long red candle: its body is at least half of its range and clearly larger than the bodies of the previous candles.
- Candle 2 has a small body: at most one-third of candle 1's body. Its colour does not matter. The top of its body does not rise above the lower quarter of candle 1's body, and its low is the lowest point of the three candles.
- Candle 3 is green and closes above the midpoint of candle 1's body.
In the textbook definition, candle 2 opens with a gap below candle 1's close. Crypto trades 24/7, so such gaps are rare. Instead of a gap, candle 2 is identified by its small body sitting at or below candle 1's close. When candle 2 is a doji, the pattern is also called a morning doji star.
What it suggests
Candle 1 shows sellers in control. In candle 2, the decline tries to continue but the body stays small: neither side takes over. Candle 3 then takes back more than half of the ground candle 1 lost. This sequence can suggest that the balance is starting to shift from sellers to buyers.
The pattern completes with candle 3's close. Before that, there is only a pause. Even when complete, it does not prove that the direction has changed on its own, and should be weighed together with other evidence.
When it strengthens, when it weakens
Strengthens
- Candle 2 forming at a support zone
- A clear decline before the pattern
- Candle 2 being a doji or having a very small body
- Candle 3 closing near or above candle 1's open
- Rising volume on candle 3
- Forming on a higher timeframe (4H, 1D)
Weakens
- Forming in a flat, directionless market
- Candle 3 only just passing the middle of candle 1's body
- Low volume on candle 3
- A strong resistance zone just above
- Forming on very low timeframes (1m, 5m)
The MarketLevelMap view
How it relates to zones
In a morning star, each of the three candles tells you something different when read with zones:
- If candle 2 forms at a support zone, the decline can be said to have paused exactly where price reacted before. The star's low often sits inside the zone or just below it.
- If candle 3 closes above the zone's upper edge, the zone holding is easier to read. If the close stays inside the zone, the picture is less clear.
- If a resistance zone sits near candle 1's open, there is a level above the ground candle 3 took back where sellers are waiting. Below that level, the pattern is considered weaker.
A morning star that forms away from any zone may just be an ordinary bounce within the decline. The zone gives a reason why the decline might have stopped there.
When it completes
Candle 3 closing above the midpoint of candle 1's body.
When it is invalidated
Before completion: If candle 3 does not close above the midpoint of candle 1's body, the pattern is not complete. If price closes below candle 2's low, the setup breaks down entirely.
After completion: Once complete, if price closes below the pattern's lowest point (usually candle 2's wick), the bullish scenario is considered invalid. If the pattern formed at a support zone, a close below the zone means the same.
Often confused with
- Evening StarThe opposite: after a rise, a small-bodied middle candle and a bearish reversal.
- Piercing LineNo middle candle: the green candle closes past the middle of the red body straight away.
- Bullish EngulfingTwo candles: the green body fully covers the red body.
For general information only. Not investment advice.Last updated: