Introduction to Morning Star Pattern
The morning star pattern is a part of the candlestick charts, which are used to indicate the market trends. There are different candlestick patterns which indicate a particular trend in the market to help traders understand the market better. One of these patterns is the morning star pattern.
For traders who are fairly new in the market, understanding such patterns and what they indicate is very important to trade successfully. Through this article we shall take a brief look at one such pattern, which is the morning star pattern and learn what this pattern indicates.
What is the Morning Star Pattern?
Morning star pattern is one of the bullish candlestick patterns and consists of three candlesticks including a tall black candlestick, smaller black or white candlestick with a short body and a tall candlestick. Technical analysts consider this pattern as a bullish indicator.
The first candle is what shows the bears that already exist in the market, the middle shorter candle is an indication that the bulls are starting to overtake the bears and the third and last candle in the morning star pattern indicates the reversal of trends in the market and a start of upward trends.
Since the morning star pattern is a visual pattern there are no calculations involved in evaluating the pattern. However, there are certain indicators that show the start of the morning star pattern, which are known as the technical indicators used by the technical analysts to determine if the morning star formation has begun. To achieve this, the technical analysts focus on technical indicators like whether the price action is coming near to a support zone or whether the stock or commodity is oversold which is indicated by the RSI or the relative strength indicator.
The opposite of the morning star pattern is the evening star pattern which indicates the start of a downward trend in the market.
