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Morning and Evening Star Patterns

Author Image Ovidiu Popescu

Ovidiu Popescu

Evening and Morning Star Patterns

The Evening Star and the Morning Star are two well-known candlestick patterns that we will examine in this post and provide you essential tips on using them in your trading approach. Even though they are considered advanced patterns, as they consist of three candles, we will give you a great overview of how to spot and include them in your trading arsenal. Also, a great trader needs a broad portfolio, so we’ll also give you three alternative trading approaches specifically suited to different markets like Stocks, Cryptocurrencies, Commodities, and Forex.

Evening Star Pattern

The Evening Star Candlestick Pattern is a significant technical indicator in finance. It is identified by a long green candlestick that is followed by a small real body. The small real body of the second line may be green or red and should not touch the first candle’s real body. The third candle of this pattern is a red real body that usually does not touch real body 2, and then closes well into the green candle line that makes up the first candle of this pattern. However, if the second candle is a doji instead of a small real body, the pattern is called an evening doji star.

Evening Star Pattern

Renowned candlestick charting expert Steve Nison once described the evening star pattern: “When movement reaches an extreme, there is stillness. This stillness gives rise to Yin (downward trend).” This phrase aptly describes the evening star pattern. The appearance of the long green candle represents the “extreme movement,” followed by the “stillness” of the small real body, indicating a transition in the trend. This “stillness gives rise to Yin” and marks the beginning of a downward trend.

It is crucial to wait for the third candlestick to confirm the bearish signal of this pattern. This is because, after the second candle, it is uncertain whether the market is in an uptrend or has entered into a period of indecision, as seen by the small real body. Only after the long red candle penetrates the first session’s green body is there a confirmation that the bears have taken control of the market.

Although some flexibility may be allowed when using candlesticks in the stock market, it should be noted that the ideal pattern offers greater potential for a top. In the classic evening star pattern, the three real bodies should not touch, while some variations include the Evening Doji Star or the Collapsing Doji Star. The latter is an “omen of a large decline” and is identified by a doji gapping under, rather than above, the first green candle.

In conclusion, the Evening Star Candlestick Pattern is a reliable technical indicator that can signal a bearish reversal in the market. You can use this pattern to make informed trading decisions with the right combination of technical analysis and market knowledge.

What Does an Evening Star Pattern Look Like?

Tesla Stock Evening Star Candlestick Pattern

Morning Star Pattern

The Morning Star candlestick pattern is a powerful signal that denotes a reversal of a downtrend, indicating that the market is about to see a new day with a sunrise of higher prices. This pattern consists of three candles, with the first being an extended red candle indicating that the bears are in control. The second candle is a small real body that does not touch the prior real body, suggesting that the sellers are losing strength to drive the market down. The final candle has a green real body that invades deeply into the first red candle, signaling that the bulls are back in control.

Morning Star Pattern

While having a gap between the second and third real bodies in a Morning Star pattern is ideal, the stock market allows for a bit more flexibility. The pattern is valid as long as the second candle is a spinning top and the third candle pushes well into the first red candle. It’s important to note that the Morning Star pattern has a small limitation, as it requires waiting until the close of the third session to complete the pattern, making it less attractive in terms of risk/reward. An alternative is to wait for the support area to start and enter long positions from there.

What Does a Morning Star Pattern Look Like?

Morning Star Candlestick Pattern Bitcoin on Morpher

Morning and Evening Star Strategy Ideas

Strategy 1: Bollinger Bands, RSI, Fear and Greed Index on the Bitcoin Charts

The Evening Star candlestick pattern is often used to identify tops in the market. However, it is a risky strategy, as timing the market can be difficult. But if done correctly, it can be worth the risk.

To use this strategy, we look for Evening Stars at the top of the market and use Bollinger Bands, the RSI, and the Crypto Fear and Greed Chart as additional indicators. For example, let’s say we’re in November 2021, almost at the top of the Bitcoin Bull-Run.

Bitcoin Chart with Bollinger Bands on Morpher
Fear and Greed Chart Bitcoin

First, we look at the RSI, which was overbought at above 70, indicating that a top might have been reached. However, the RSI is only one indicator, and other signs of an overheated market should be considered.

Next, we look at the Fear and Greed Chart, which shows that the Index is almost at an all-time high, with a value of 75, only 9 points away from the all-time high. Both indicators suggest that the bulls are losing steam, and it might be time to start looking for the right candlestick patterns.

In extreme cases, like with Bitcoin or other cryptocurrencies that have gained over 100% in the prior months, using Bollinger Bands can be a helpful strategy. Bollinger Bands indicate the volatility of the market and can be used to sell at the tops of the bands or buy at the bottoms. However, the best confirmation of a clear entry position for a short is when the candles go out of the Bollinger Bands.

Once we’ve identified an Evening Star forming, we wait for the third candle to confirm before entering the position and going short Bitcoin.

Trading Rules

  1. RSI overbought 65+
  2. Fear & Greed Index High 60+
  3. Identify Evening Star
  4. Wait for the third candle to confirm 
  5. Go Short

Strategy 2: EMA Cross and Natural Gas

EMA Cross on Natural Gas Chart on Morpher

Natural Gas has proven to be an exciting market for traders who use technical analysis due to its high volume and frequent price swings. One strategy for this market involves searching for the Evening Star pattern and combining it with the EMA Cross to identify a trend reversal. For example, on June 7th, 2022, the second real body candle appeared, indicating a potential reversal, and you should wait for the third red candle to move strongly into the first candle.

It is important to note that the candles may not align perfectly, and the trend may still be upward, as seen on the charts. Therefore, you should not be certain that the trend will reverse based on this pattern alone. To confirm the potential reversal, you can use the EMA Cross indicator.

If you are willing to take on more risk may consider shorting the market at this point, but it is essential to protect yourself with a stop loss. However, waiting for the second confirmation of the EMA Cross may be a more conservative approach. A few days later, if the EMA Cross confirms the reversal, it is an excellent sign to enter the short position in the overextended market. This short position could yield a profit of approximately 25%, from around $8 to $6. With a strong confirmation, you may also consider using leverage, but it is crucial to manage the trade carefully and set a good stop loss to prevent significant losses.

Trading Rules

  1. Search for an Uptrend
  2. Identify Evening Star Pattern
  3. If EMA Cross confirms 
  4. Go Short

Strategy 3: Trend Strength Index and Russian Ruble

Trend Strength Index and Russian Ruble Chart on Morpher

In this trading strategy, we will be using the morning star pattern to look for an upward trend in the USD/RUB exchange rate. Along with the candlestick pattern, we will also be utilizing the Trend Strength Index to confirm our analysis.

The market had been moving sideways for quite some time, allowing us to look out for candlestick patterns to take advantage of daily or weekly swings. On August 3rd, 2021, we noticed the formation of a morning star pattern, with the second candle almost forming a doji candle. We then waited for the confirmation on the next day with a real body green candle larger than the first. At this point, we could take the trade and make around a 2% profit. This profit could go up to 10% or 20% with leverage.

However, we cannot solely rely on forming the candlestick patterns. We also use the Trend Strength Index to see if a trend is forming or losing momentum. In this case, the trend showed signs of a bottom, indicating a potential reversal, especially in the support-resistance environment that the ruble was in at that time.

With this knowledge, we can predict more accurately that our morning star pattern will play out in the right direction, as the trend may have peaked and lost momentum.

Trading Rules

  1. Look for a sideways market with daily and weekly reversals 
  2. Identify Morning Star pattern
  3. Confirm if the Trend Strength Index is at low 
  4. Go Long 

Candlestick Patterns are not 100% Accurate

No technical analysis tool is 100% accurate, and this includes candlestick patterns. While they can give you an edge in the markets, their effectiveness depends on several factors, such as timeframe, asset, volatility, and the specific entry/exit trading rules you set. Therefore, you should exercise caution when using candlestick patterns and not rely solely on them for trading decisions.

There are several examples of situations when candlestick patterns fail to predict price movements. For instance, a candlestick pattern may indicate a reversal of a trend, but unexpected news events or market conditions could result in a continuation of the trend. A candlestick pattern may appear to be forming, but the lack of trading volume could make it less reliable. 

Before incorporating candlestick patterns into your trading methods, you should do extensive research and backtesting to enhance your performance. You should also consider other important market indicators, such as volume, order flow, and news events, and avoid relying too heavily on patterns because this can result in a trading strategy lacking diversity, which raises your risk exposure. 

In conclusion, you shouldn’t base your trading decisions simply on candlestick patterns, even though they can provide insightful analyses of market emotion. Before trading candlestick patterns, they should extensively study and backtest and consider other important market indicators. Trading professionals can boost your chances of market success by doing this and avoiding costly mistakes.

Best Platform to Trade Candlestick Patterns

When trading candlestick patterns, having the right platform is crucial to success. Here are some key factors to consider when choosing the best platform:

  • Maximum Flexibility: Look for a platform that allows you to go long or short on any asset and use leverage to profit from even the smallest signals in any direction.
  • Variety of Assets: A good platform should offer a diverse range of assets to trade from, including stocks, cryptocurrencies, commodities, forex, and unique markets. This ensures you can always find useful patterns and profitable markets to trade.
  • Great Indicators and Advanced Chart View: The platform should have great indicators and an advanced chart view that allows you to save templates you have created and combine multiple indicators to get the best edge possible.
  • Infinite Liquidity: Choosing a platform with infinite liquidity is important, so you can close every position at the exact price you aimed for and have no slippage.
  • Zero Fees: Look for a platform that offers zero fees, so even if you want to scalp some quick profits, you do not lose on the fees. Combined with fractional trading, you can get in on every position for less than $1.

If you’re looking for a platform that offers all of these features, Morpher is a great choice. It’s specifically designed to provide the best trading experience possible, with maximum flexibility, a wide range of assets to trade, great indicators and an advanced chart view, infinite liquidity, and zero fees.

Morpher Trading Platform


In conclusion, these patterns have proven valuable tools for traders seeking to make profitable trades. By incorporating the Morning and Evening Star patterns into your trading strategy and using technical indicators to identify market trends, you can maximize your chances of making informed trading decisions. 

Disclaimer: All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, or individual’s trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs. This post does not constitute investment advice.

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