The morning star candlestick pattern is a bullish reversal pattern that tells traders that the stock is bottoming and about to reverse higher. This pattern can appear in stocks, indexes and even commodities. They often appear at the end of a downtrend and also at the end of a correction. When traders see this pattern, they often get ready themselves for a reversal to the upside in their stocks.
The above picture is what the construction of the pattern looks like. First there will be a large red bar which is followed by a gap down and a small body showing slowing momentum to the downside. The next day, the stock gaps up and bulls quickly come in and push the stock higher forming a large green bar.
The morning star is aptly named. It reminds me of our Lord Jesus Christ because Jesus is known as the bright and morning star which brings hope to the world. Therefore, the appearance of the morning star pattern in a stock or index brings hope to the stock.
The chart above is the daily chart of Malaysian stock index FTSE KLCI. The index had a 3 days correction but it was forming a morning star candlestick pattern right at the rising 20 MA. This hinted of a reversal to the upside and from there the stock shot up for a week and subsequently went higher as the uptrend continued.
Charts with the Freestockcharts.com label are courtesy of Freestockcharts.com
Charts with the investing.com logo are courtesy of Investing.com powered by Trading View
Oct 20, 21 11:48 AM
Are the markets in an uptrend or downtrend? Where are the support and resistance areas? Stock market analysis for October 2021.
Oct 19, 21 08:25 PM
A combination of technical setups help to propel AMD higher. When it hit the 200 MA, it bounce up and shot up to $122.
Oct 19, 21 01:01 AM
After correcting to the 50 day moving average, Alcoa was able to find support and rise to $57 in less than two months.
Oct 18, 21 12:24 AM
Technical analysis of Visa stock. A look at its trends and support and resistance.
Oct 17, 21 10:38 PM
Analysis of Bitcoin's chart. Is it in an uptrend or downtrend and where is the support and resistance.