The ‘Morning Star’ or its variant ‘Morning Star Doji’ is a high credibility bullish reversal pattern that is made up of three candlesticks. The first is a big black candle that is followed by a small candlestick that could either be black or white, as long as it gaps down. The third candlestick should be white closing well within the body of the initial big black candlestick of the pattern.
The ‘Morning Star (Doji)’ is actually a confirmed ‘Bullish (Doji) Star’, i.e. the first two candlesticks make up a ‘Bullish (Doji) Star’ and the third white candlestick represents the needed confirmation for trading. The name for the pattern is derived from the planet Venus the ‘Morning Star’ when it appears at its brightest at dawn.
Technical Description
1) The first black candlestick should have a big body and be preceded by a bear market.
2) We see the second candlestick with a small body, its color is irrelevant.
3) There should be a body gap between the first candle and the second candlestick.
4) For the third candlestick it should be white and close well within the body of the first candle in the pattern.
Mark’s Perspective
A ‘Morning Star (Doji)’ is already a confirmed bullish reversal pattern, i.e. the medium credibility ‘Bullish (Doji) Star’ and as such can be traded aggressively. We can take a buy at market the moment the pattern is formed’ with stops placed below the patterns low. The greater that the white candlestick pushes into the body of the black candlestick the more significant the pattern becomes.