The Morning Star candlestick pattern is one of the strong reversal candlestick patterns, signaling a reversal trend from down to up. This type of pattern often appears on Forex charts and is of interest to many investors. So to find out what is Morning Star? Identification characteristics and how to perform transactions. Let Forex Trading explore the article below in detail to get the correct answer.
Candles what is Morning Star and some highlights that traders should know
The Morning Star candlestick is a bullish reversal candlestick pattern that often appears on the chart. To better understand what outstanding features this model has, refer to the information below:
Candles what is Morning Star?
The Morning Star candlestick pattern is a reversal candlestick pattern that occurs at the bottom of a downtrend. This type of candlestick often appears at the end of a downtrend to signal that the market is starting to reverse upward. This candlestick pattern shows a weakening of the downtrend. At the same time, there is also the possibility of laying the foundation for a new uptrend.
Outstanding features of Morning Star candles
This type of candle is structured differently from other Japanese candlestick patterns. Therefore, identifying characteristics of this model include:
- The first candle is a red bearish candle with a relatively large body. The longer the body of this type of candle, the better.
- The second candle can be a blue candle or a red candle. This candle has a small body and will often be a Doji or Spinning top candlestick pattern.
- The third candle is a strong blue bullish candle with a large body. Has a minimum length of about 1/2 to 3/4 of the first candle.
- If the gap between the second candle and the remaining two candles is large, this model is considered highly effective.
- The Morning Star candlestick pattern often appears at the bottom of a downtrend.
- The Morning Star candlestick model is combined with other technical analysis methods such as the Harmonic model and, technical indicators… to increase the reliability of trading signals.
The meaning of the reversal candlestick pattern What is Morning Star?
Many people wonder about the meaning of candles what is Morning Star? To answer this question, read the information below:
- The Sao Mai reversal candlestick pattern provides traders with an overview of the investment market. When this type of candle appears, investors will easily see the struggle between the two sides. The first candle shows the dominance of the sellers with a large candle body. On the other hand, when the second candle appears, the market struggle becomes stronger.
- The Morning Star candlestick pattern is meant to signal a potential reversal of the current trend. When the pattern completes and the price reaches the potential reversal zone, the price will likely reverse. At the same time, the price will continue in the opposite direction of the previous trend.
- Morning Star candlestick potential profit target levels are often determined using Fibonacci ratios. Popular profit target levels include 1.618, 2.618, and 3.24 of the wavelength. Calculated from the bottom of the first candle to the top of the third candle.
- The Morning Star candlestick pattern stop loss is usually placed below the low point of the third candle.
See more: Analyze & forecast trend effective candlestick pattern
How to trade with Japanese candlesticks what is Morning Star?
To conveniently trade with Japanese candlesticks, you can do it in the following ways:
Combine Morning Star Japanese candlestick with simple trading
To combine the Morning Star candlestick pattern with simple trading, you can apply the following methods:
- Entry point: Enter a Buy order as soon as you see the pattern is complete, which means at the closing price of the 3rd candle.
- Stop loss point: Stop loss a few pips below the lowest price of the model.
- Take profit point: You can take profit at the nearest resistance level, as long as the R: R ratio of 1:1 or 1:2 can be satisfied. However, if the trend expands, the R: R ratio may be equal to 1:10.
Morning Star candlestick is performed in conjunction with the support line
In this method, the support area is considered a price selection zone. Simultaneously. It is also a tool to help predict uptrend reversals. If the Sao Mai reversal candlestick pattern appears in this area, it is more certain that the price will increase. At this point, you can safely place orders to make big profits.
Note:
- You should pay attention to the chart in the 5-minute time frame (M5). The way the order can be entered is specifically: When the price touches the support zone and a candlestick pattern is formed. Traders can immediately enter a BUY order at the closing price of the 3rd candle. The same is done to stop loss and take profit points.
Use the RSI indicator with the morning star candlestick pattern
When combining the RSI indicator with the Morning Star candlestick model, the reversal signal will be extremely accurate. At the same time, this is a good opportunity for investors to fish for the bottom to make a profit.
The perfect time to enter an order is when the RSI indicator exceeds 30 in the oversold area and combines with Morning Star. At this time, investors can enter a Buy order at the closing price of candle 3.
See more: Discover Exness – The world’s leading Broker
Notes when trading with candlesticks what is Morning Star?
- The Morning Star candlestick pattern appears at the end of a downtrend and signals a potential reversal to a new uptrend. Therefore, before trading, it is necessary to confirm the current downtrend by using technical analysis tools such as trend lines, technical indicators RSI, MACD, or Forex price patterns.
- The trading volume in the third candle (bullish candle) should increase compared to the first and second candles. The high trading volume shows strong participation from buyers and increases the credibility of the reversal signal.
- The price should break above the previous downtrend line to confirm a reversal. A break above the trend line indicates strong buying pressure that could push the price higher.
- You should use a demo account to trade with the Morning Star candlestick pattern. Do not use your main account to make transactions. Because it can cause many risks and damage to you.
- Pay attention to practicing trading on a demo account to improve your skills and avoid making mistakes when trading.
Conclude
So the above article, Forex Trading has shared with you information about Morning Star candles. Surely after reading this article, you will understand what is Morning Star. What are the characteristics and trading methods? Hopefully, you can apply this information to your investment and trading process. If you have any questions after consulting about this type of reversal candle, Don’t wait, be sure to contact us directly!
FAQs:
How many candles does the Morning Stars reversal candlestick pattern include?
Morning Stars Candles include 3 types of candles, each type of candle will play a different functional role.
Where does the Morning Stars candlestick pattern appear?
The Morning Stars candlestick pattern often appears at the end of a downtrend, at a support zone, or when the price breaks through a downtrend line.
How to confirm the signal of the Morning Stars candlestick pattern?
Signals can be confirmed using trading volume, trend lines, technical indicators, etc.
