Morning Star
A morning star is a three-candle bullish reversal pattern: a large red candle, followed by a small-bodied candle (gap down), followed by a large green candle that closes above the first candle's midpoint.
Understanding the Concept
This pattern marks the transition from bear to bull. The first candle shows strong selling. The second candle's small body (can be a doji) shows indecision—sellers are exhausted. The third candle confirms buyers have taken control. It's called "morning star" because it signals dawn after the darkness of the downtrend. The pattern is more reliable when the middle candle gaps below the first and the third gaps above the second. Volume should increase on the third candle.
Real-World Example
Bitcoin: Day 1 drops from $42,000 to $40,000 (big red). Day 2 gaps down, opens at $39,800, closes at $39,900 (tiny body). Day 3 gaps up, opens at $40,100, closes at $42,500 (big green). Morning star confirmed—bullish.
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