What is Morning Star?
Morning Star is a three candle reversal pattern. This pattern usually appears at the bottom of a downtrend and signals for a reversal. The reversal could actually be a correction in the trend or a complete reversal to a new trend (see image).
The first candle of the pattern is always bearish. The second candle has a small real body and could be bearish or bullish. The third candle is always bullish. The body of the first and third candle is usually long. The most important characteristic of the Morning Star formation is that the real body of the second candle must lie below the real body of the first candle. In other words the real body of the second candle does not overlap the real body of the first candle. It could be below the lower shadow of the first candle or overlap it.
Note: I strongly recommend to use other technical tools to confirm the signals generated by candle patterns.
Locating Morning Star Formation in a Chart
The main problem with locating Morning Star is the subjective definition of the pattern. I made some assumptions to help my custom indicator locate such patterns in a chart. For example I assumed that the size of the middle or rather second candle must be less than half the size of any of the other two candles. I also assumed that side candles (i.e. candle 1 and 3) must be at least 5 pips. The following image shows a sample pattern which is located by this indicator.
The indicator places three up arrows below the candles to locate the pattern.
Download the Morning Star Indicator [download]
Click here to download the compiled version of this indicator. I have designed the indicator for MetaTrader 4 (MT4). If you are not using the latest build of MT4 then you may encounter technical problems. Click here for more information and possible solutions.
If you are not familiar with using custom indicators then click here.
If you are one of my MQL students you may download the source code of this indicator from your training site. Click here for more information about my MQL training program. You may also click here for more information about different options that I offer for training MQL (one of them is absolutely free).
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