A morning star candlesticks pattern consist of three candlesticks interpreted as a bullish technical sign. A morning star is formed following a downward trend and it indicates the start of an upward climb. It is a sign of a reversal in the previous price trend.
Identification: A morning star pattern is made up of a tall red candlestick, a smaller red or green candlestick with a short body and long wicks, and a third tall green candlestick. The middle candle of the morning star captures a moment of market indecision where the bears begin to give way to bulls. Then use the third candle as a confirmation of the reversal and mark of a new uptrend.
Occurrence: A morning star pattern occurs at the end of a downtrend. These three sticks should also be accompanied with good volume to confirm the trend reversal. The middle stick could be either green or red marking the change of bearishness and the third candle being green confirming the pattern.
Study: A trader takes the morning star as a bullish indicator to take up a bullish position in the stock/commodity/pair/etc. Generally, an increase in volume throughout the three sessions of the pattern with the third day seeing the most volume is what confirms the trend reversal. Highest volume on the third day is often seen as a confirmation of the pattern (and a subsequent uptrend) regardless of other indicators. Traders aim to keep the bottom of the middle stick as the stop loss.