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What is Morning and Evening Star pattern?

Morning Star candlestick pattern

This is a reversal pattern which 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


starpattern

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

When is Morning Star pattern found?

1st candle: When 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 in nature.

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

Evening Star candlestick pattern

This is a reversal pattern which 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 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 negative commodity news gives rise to the third candle. – It’s long and bearish in nature.

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

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