EURUSD 1.1855 USDJPY 111.60 USDCAD 1.2374 EURCZK 26.028 USDCZK 21.953 EURPLN 4.2728 USDPLN 3.6046
EURUSD 1.1855 USDJPY 111.60 USDCAD 1.2374 EURCZK 26.028 USDCZK 21.953 EURPLN 4.2728 USDPLN 3.6046

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Morning stars are formations that indicate a possible reversal of a downward trend

Rule of thumb

The length of the third candle may indicate the strength of the reversal

Chart type: Candlestick

Applies to: Reversal

Significance: High

 

The morning star is a formation represented by three candles, indicating a reversal of a downward trend (bottom reversal). The first candle is a falling candle. The second candle may be a rising or falling one, which generates a gap in comparison with the previous one.

 

morning star, formation

 

A gap here is understood as a situation where the maximum price of the second candle is lower than the minimum price of the first one. The third candle is also a rising candle. Ideally there should also be a gap between the second and third candle, that is the minimum price of the last candle is higher than the maximum price of the second one.

 

How to identify it with MetaTrader 5:

  • Select the candlestick chart with the Candlesticks button.
  • Look for a clearly visible downward trend.
  • The first candle is a falling candle.
  • The second candle may either be a rising or falling candle, but with a gap comparing with  the previous candle.
  • The third candle is clearly a rising candle.

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