Candlestick patterns offer powerful clues about market sentiment, and few are as reliable for spotting reversals as the evening star and morning star patterns. These formations provide early warnings that a trend may be losing strength and a new direction could be underway.

In this article, we explain how to identify and trade evening star and morning star candlesticks effectively across different markets.

What are Evening Star and Morning Star Candlesticks?

The evening star and morning star are three-candle reversal patterns that occur at the end of strong trends:

• Morning Star: Appears at the end of a downtrend and signals a potential bullish reversal.
• Evening Star: Appears at the end of an uptrend and signals a potential bearish reversal.

Both patterns show a shift in momentum and highlight the battle between buyers and sellers.

Structure of the Morning Star

• First Candle: A large bearish candle showing strong selling pressure.
• Second Candle: A small-bodied candle (bullish or bearish) indicating indecision. This candle often forms a doji or spinning top.
• Third Candle: A strong bullish candle that closes well into the body of the first bearish candle, confirming a shift in sentiment.

Structure of the Evening Star

• First Candle: A large bullish candle showing strong buying pressure.
• Second Candle: A small-bodied candle (bullish or bearish) reflecting indecision.
• Third Candle: A strong bearish candle that closes well into the body of the first bullish candle, confirming the potential reversal.

Why These Patterns Are Important

• Momentum Shift: Both patterns highlight a clear transition between buyers and sellers.
• Early Reversal Signals: They often appear before a major trend change, allowing traders to position early.
• Simple to Recognise: Clear, visual structures make them easy to spot on any chart.

How to Identify Morning Star and Evening Star Patterns

Follow these steps to spot high-quality morning and evening stars:

1. Existing Trend

These patterns are only significant after a strong trend — downward for a morning star and upward for an evening star.

2. Small Middle Candle

The middle candle should have a small body, showing indecision in the market.

3. Confirmation Candle

The third candle must be strong, closing deep into the body of the first candle, showing a decisive momentum shift.

4. Location at Key Levels

Morning and evening stars forming near major support and resistance levels, trendlines, or Fibonacci retracement zones are more reliable.

How to Trade the Morning Star and Evening Star

Here’s a structured approach:

1. Entry Strategy

Enter the trade after the third candle closes:

• Morning Star: Buy after the bullish third candle closes.
• Evening Star: Sell after the bearish third candle closes.

2. Stop-loss Placement

Set the stop-loss just below the low of the morning star or above the high of the evening star to protect against false signals.

3. Profit Target

Use nearby support/resistance levels or Fibonacci extension levels for setting profit targets. Maintain a minimum risk-reward ratio of 1:2.

4. Risk Management

Only risk a small, consistent portion of your trading capital on each trade. Proper position sizing is key.

Best Practices for Trading Morning and Evening Stars

• Wait for Confirmation: Only act after the third candle closes strongly.
• Use Additional Indicators: Combine with volume, RSI, or moving averages for higher probability trades.
• Align with Market Context: Patterns are more reliable when they occur at strong technical zones.

Common Mistakes to Avoid

• Ignoring the Trend: These patterns are only meaningful after a strong prior trend.
• Jumping in Early: Wait for the full pattern to form before entering.
• Overlooking Confirmation: Always ensure the third candle shows strong momentum.

Advantages of Morning and Evening Star Patterns

• Clear Signals: Easy to spot and interpret on the chart.
• Early Reversal Indication: Helps catch new trends early.
• Works Across Markets: Effective in forex, stocks, commodities, and indices.

Conclusion

The morning star and evening star candlestick patterns are highly effective tools for identifying potential reversals. By understanding their structure, waiting for confirmation, and applying sound risk management, traders can use these patterns to improve their timing and trade with greater confidence.

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