There is an interesting pattern called the Morning Star Pattern in Trading Patterns. This pattern is unique because it consists of 3 candlesticks, which are all bullish. The first one has a long upper shadow (or big red candle), the second one has an even longer upper shadow (or big green candle), and then finally, the last one has a short upper shadow (or small black candle). This article will discuss how reliable the morning star pattern is.
Table of Contents
Reasons Why Morning Star Pattern is Reliable
1. Price Tendency
The first reason we will discuss is the price tendency. From the first candlestick, we can see a big red candle, which means that there was a big downward movement after a bullish run. The next day, the price went up significantly and closed in the green. This showed us that bulls were still in charge and are likely to continue pushing the market even higher. This type of bullish momentum is likely to continue through the third candlestick.
2. Previous Trend Continuation
Another reason why this particular Morning Star pattern is so reliable because it simply continues the previous trend. After a bearish trend, a long red candle appears, which signals the end of the downtrend. The next day, the price went up significantly and closed in the green, showing us that bulls were willing to take control and push the price higher. The third candlestick continues the bullish trend and is likely to continue.
The volume also plays an important role in this pattern. In the first candlestick, we can see that volume was pretty high. That means plenty of bears were coming into the market, pushing the price down significantly. From the second candlestick, we can see that volume was quite low. The bears had all exited the market and pushed the price down very little. That meant there weren’t too many bears coming into the market and pushing prices down anymore. From the third candlestick, volume was even lower. This meant there wasn’t enough demand for bulls to continue buying and pushing the price back up.
4. Third Candle
The third candlestick makes this pattern so reliable because it is a continuation of the previous trend. Price went up significantly and closed in the green, which means bulls are still in charge and will continue pushing higher prices.
The third candle also plays an important role because it helps us understand if bulls or bears are still in charge. If there is a long upper shadow (or big red candle) and a lower shadow (or small black candle), it means that bulls were very strong and could push the price back up past the previous high of the black candle. If there is a lower shadow (or small green candle) that has a long upper shadow (or big black candle), it means that the bears were very strong and were able to push the price back down past the previous low of the black candle.
5. Previous Close
The other reason this particular pattern is so reliable is that it allows us to see if the market will continue in a certain direction or reverse. When both of the candles close higher than the previous candle, we know that bulls are still in charge and will likely continue pushing the price higher. When they close lower than the previous candle, we know that bears took control of the market and are likely to continue pushing prices lower. This allows us to make more informed trades in the marketplace.
6. Color Pattern
The third reason why this particular pattern is reliable is that it has a very distinctive color pattern. The first candlestick has a long upper shadow and a lower shadow. These two shadows have the same color; both are bullish. The next candlestick has a long upper shadow with the same color as the previous shadows. This means that it is also bullish. The last candlestick has a short upper shadow and a lower shadow. These two shadows have the same color; both are bullish. The third candlestick is bullish because it has the same color as the previous shadows. This is why this particular pattern is so reliable. When there is consistency in the colors of candlestick shadows, we know that we are more likely to break higher. If the colors don’t line up, we will see bigger and smaller downtrends.
7. Previous High and Low
Finally, the last reason this particular pattern is so reliable is that it allows us to see whether we will break higher or lower. When the third candle breaks above the previous high, we know bulls are still in control and will likely continue pushing higher prices. When it breaks below the previous low, we know that bears took control of the market and will likely continue pushing prices lower. This gives us more confidence in our trading strategies.
In conclusion, this Morning Star pattern is very reliable and allows us to see whether bulls or bears are in charge. We know that the market will continue going down for a bit when it is bearish until bulls can retake control. When it is bullish, we know that the market will continue going up for a bit until bears can take control. This Morning Star pattern is extremely important because it lets us know if bulls or bears are in charge.
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