4.4 Morning star pattern explained Video Lecture | Forex: Learn and Master Trading (English) - Business Basics

welcome back to capex forex trading comm
in this lesson we're going to discuss
another reversal pattern called a
morning star pattern so in terms of its
definition the morning star pattern
comprises of three candles the first is
a strong black candle that you can see
here the second is a candle whose color
does not matter and a third is a strong
white candle now the morning star
pattern always occurs at the bottom of a
downtrend so it's its sole purpose to
take the current downtrend and reverse
it back up in the upwards direction in
terms of the rule for the morning star
pattern the first candle always has to
be a strong black candle that you can
see here the second candle is a small
spinning top that opens and closes at or
below the first black candles close
which you can see here the third candle
has to be a strong white candle that
opens at or above the second candles
close and it also has to close more than
halfway into the first black candles
realbody so that you can see there now
if this white candle closed in this area
here this pattern would not qualify as a
morning star pattern so in terms of our
example what we've got here is a morning
star pattern now first of all here we've
got a strong black candle the second
candle is a small spinning top and
lastly the third candle is a strong
white candle now because Forex is a 24
hour market what we don't see are gaps
in a market on a regular basis so what
you usually find is that the candles
open is usually the same level as the
previous candles close and that's
exactly what we've got here so we've got
a strong black candle that's followed by
a small spinning top that opened at the
same level as the first black candle
then it closed below that level now the
white candle rather than opening above
the spinning top which is the second
candle he actually opened at the same
level as the close of the second candle
and then it closed more than halfway
into the first black candles real body
so despite this of this change in rules
the actual pattern is still valid and as
you can see it has taken this downtrend
and reversed it back up in euros
direction so one thing you must not do
is place a buy every time that you see a
morning star pattern the reason why is
because this type of pattern occurs in
the market regularly and you need a lot
more confirmation to take this trade
okay so that concludes this lesson so as
always if you have any questions or
comments do let us know and we'll see
you for the next lesson