Morning & Evening Stars
Lesson 3 of 108 min5 exercises
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Three-Candle Reversal Patterns
The Morning Star and Evening Star are classic three-candle reversal patterns. They're named after celestial bodies because the middle candle "shines" as a turning point.
MORNING STAR (Bullish Reversal)
The Three Candles:
1. Large bearish candle: Confirms the downtrend
2. Small body candle (the "star"): Gap down, small body = indecision
3. Large bullish candle: Closes into first candle's body
What it means: Sellers exhausted, dawn is breaking (new uptrend).
Nickname: "The Dawn" or "Phoenix Rising"
1. Large bearish candle: Confirms the downtrend
2. Small body candle (the "star"): Gap down, small body = indecision
3. Large bullish candle: Closes into first candle's body
What it means: Sellers exhausted, dawn is breaking (new uptrend).
Nickname: "The Dawn" or "Phoenix Rising"
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EVENING STAR (Bearish Reversal)
The Three Candles:
1. Large bullish candle: Confirms the uptrend
2. Small body candle (the "star"): Gap up, small body = indecision
3. Large bearish candle: Closes into first candle's body
What it means: Buyers exhausted, night is falling (new downtrend).
Nickname: "The Dusk" or "Icarus"
1. Large bullish candle: Confirms the uptrend
2. Small body candle (the "star"): Gap up, small body = indecision
3. Large bearish candle: Closes into first candle's body
What it means: Buyers exhausted, night is falling (new downtrend).
Nickname: "The Dusk" or "Icarus"
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DOJI STAR Variations
Morning Doji Star: Middle candle is a Doji (even stronger signal)
Evening Doji Star: Middle candle is a Doji (even stronger signal)
The Doji shows extreme indecision, making the reversal more significant.
Evening Doji Star: Middle candle is a Doji (even stronger signal)
The Doji shows extreme indecision, making the reversal more significant.
ABANDONED BABY
Abandoned baby: a doji that gaps away from the candles on both sides. Bullish after a red candle, bearish after a green one.
Requirements: Like Morning/Evening Star but the Doji must have gaps on BOTH sides (doesn't overlap either candle).
Signal: One of the most reliable reversal patterns because it shows complete separation from the prior trend.
Nickname: "The Orphan" or "Island Reversal"
Signal: One of the most reliable reversal patterns because it shows complete separation from the prior trend.
Nickname: "The Orphan" or "Island Reversal"
Tip
In crypto and some stocks that trade 24/7, gaps are rare. Look for the SPIRIT of the pattern - a small indecision candle between two larger opposing candles.
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Key takeaways
- Morning Star = big red → small star → big green (bullish)
- Evening Star = big green → small star → big red (bearish)
- Doji stars are even more powerful signals
- Abandoned Baby requires gaps on both sides of the star
Next: 5 quick exercises. Miss one and it comes back at the end.