Morning Star Pattern: The 3-Candle Bottom Reversal With 90% Strength

The morning star is the strongest bullish reversal pattern in GeckoScreener's detection library — rated 90/100. It takes three candles to complete, and each candle plays a specific role in the story of a trend turning.

Candle 1 shows the bears in control. Candle 2 shows neither side winning. Candle 3 shows buyers decisively taking over.

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What Is the Morning Star?

The morning star is a three-candle pattern that marks the transition from a downtrend to an uptrend. Each candle represents a phase in the sentiment shift:

Candle 1 — The Decline: A large bearish (red) candle. Selling in full force. Bears in control.

Candle 2 — The Star (Indecision): A small-bodied candle — either a doji, spinning top, or short candle. Crucially, it "gaps" away from the first candle's close (in crypto: opens lower). This is the pivot point. Neither side wins this session. The small body after the large red candle shows that selling momentum has suddenly evaporated.

Candle 3 — The Takeover: A large bullish (green) candle that opens above the second candle's close and pushes deeply into the first candle's body. The deeper it goes — ideally past the midpoint or even above the first candle's open — the stronger the reversal confirmation.

Formation rules:

• Three consecutive candles
• Candle 1: Large bearish (body > 50% of the overall pattern range)
• Candle 2: Small body, ideally gapping away from Candle 1's close; can be any color
• Candle 3: Large bullish candle closing at least 50% into Candle 1's body
• Context: Appears after a downtrend or significant decline

Strength rating: 90/100 — the highest rated bullish reversal pattern.

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The Psychology — A Three-Act Story

Act 1 — Bearish Control: The market has been falling. The large red candle extends the decline. Sellers are confident. Long positions are stopped out.

Act 2 — Hesitation: Something changes. The next session opens even lower (gap down into the "star" position), but neither side can dominate. Maybe it's news-driven, maybe it's technical. Price oscillates, and the session closes with a small body. The large red candle told a story of conviction. The small star tells a story of uncertainty. The bears have lost their certainty.

Act 3 — Buyer Takeover: The third session tells you who won the hesitation. It opens above the star and buyers push with force through the session. By the close, they've recovered a substantial portion — or all — of what the first red candle lost. Every short position taken during the first two candles is now losing money. The short squeeze adds fuel.

The three-candle structure is more reliable than a single-candle signal precisely because it narrates the full transition: dominance → uncertainty → reversal.

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What It Means Based on Position

At the Bottom of a Downtrend — Primary Context (Maximum Reliability)

The morning star in its ideal context: after a sustained decline, at or near a major support level. The extended downtrend means there was real selling pressure to exhaust. The support level is where buyers were expected to return.

When the morning star forms at the bottom of a multi-week decline near a 200-day moving average or a historical support area, it's one of the highest-conviction buy signals in crypto technical analysis.

Historical significance: In several of crypto's major bottoms (BTC Q4 2022, ETH bear market lows), morning star patterns formed on the weekly or monthly chart at major support levels.

On Higher Timeframes (Daily/Weekly) — Substantially More Reliable

A morning star on the daily chart represents three days of market action. The hesitation on Day 2 is a genuine 24-hour indecision period. The third candle's recovery spans a full day's worth of buying.

A morning star on the 1-hour chart represents just three hours. Less significant.

For the most reliable signals, prioritize daily and weekly morning stars at key technical levels.

Mid-Trend (After Short Pullback) — Continuation Signal

A morning star that forms after a brief pullback in an overall uptrend signals trend continuation. The three-candle pattern confirms the pullback is over and buyers are resuming control. This is a clean re-entry signal.

Near Multiple Confluences

The most powerful morning stars occur when multiple factors align:

• End of extended downtrend
• Major support level
• RSI deeply oversold (< 30)
• Volume on third candle substantially higher than second
• Daily or weekly timeframe

When all five are present alongside the morning star, it's one of the strongest setups available.

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How to Trade the Morning Star

Entry: Open of the candle following the third (green) candle, or the close of the third candle itself.

Stop loss: Below the low of the second (star) candle — or the overall pattern low if the star has the lowest price. If price closes below the star's low, the reversal has failed.

Take profit:

• Conservative: Previous resistance level or prior swing high
• Aggressive: A measured move equal to the height of the three-candle pattern

Volume check: The third candle should have equal or higher volume than the first candle. If buyers came in with more force than sellers — that's the institutional signal. A third candle on low volume suggests the recovery lacks conviction.

Timeframe selection: Trade morning stars on the timeframe that matches your holding period. A daily morning star → multi-day to multi-week trade. A 4H morning star → multi-hour to multi-day trade.

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What Increases Reliability

• Extended prior downtrend: More selling exhaustion = stronger reversal signal
• Star candle gaps away from Candle 1 (in crypto: opens significantly below prior close)
• Third candle recovers past 50% of first candle: At least half the losses reclaimed
• Third candle closes above Candle 1's midpoint: Even stronger — full reversal
• High volume on third candle: Real buying participation
• At a major support level: Structure reinforces the signal
• RSI oversold entering the pattern: Momentum confirms exhaustion
• Daily or weekly timeframe: Longer sessions = more reliable

What Reduces Reliability

• Small first candle: Less selling pressure to reverse
• Third candle barely pierces Candle 1's midpoint: Weak recovery
• Low volume on third candle: Buying conviction is thin
• No prior downtrend: Context mismatch
• 1H or 15M timeframe: Less signal weight
• Sideways market: Less meaningful in ranging conditions

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