The name of this reversal pattern might remind you of the fictional character and the protagonist of the TV series Lucifer. (We love that show too, but let’s stick to the trading side of things!)
In the trading world, the morning star is a three-candlestick reversal pattern at the end of the downtrend or a decline.
The first candle is a long black body in the direction of the trend “showing off” the sellers’ strength, and the second is a small black or white candle that may open below the prior close.
Lastly, the third candle is a long white body that closes well into the long black body, ideally above fifty per cent, and signals the end of the downtrend.
For this reversal pattern, the buy signal is usually seen when the next candle exceeds the high of the pattern.
Remember the stop loss at the low of the pattern!
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