The Concept of Morning Star
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Technical experts view morning stars, a visual pattern made up of three candlesticks, as optimistic indications. A morning star develops in a downward direction and marks the beginning of an ascent. It indicates a change in the prior price trend. Traders look for the emergence of a morning star before employing further indications to verify the occurrence of a reversal.
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Most traders anticipate the market will keep falling while it is in a bearish trend. Traders are either shorting the market or exiting it as they wait for a positive direction to begin because the market attitude is currently pessimistic.
What lessons can we draw from the morning star?
A morning star is merely a visual pattern; hence, no exact calculations can be made. A three-candle pattern known as a morning star has a low point in the second candle. However, the bottom end is not apparent until the third candle has closed.
A three-candle pattern known as a morning star has a low point in the second candle. However, the bottom end is not apparent until the third candle has closed. If a morning star is forming, it may be possible to tell by looking at other technical indicators, such as whether or not the price movement is approaching a support zone or whether the relative strength indicator (RSI) shows that the stock or commodity is oversold.
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Morning star patterns can visually indicate the beginning of a shift from a negative to a bullish trend. Still, as already noted, they are more reliable when other technical indicators support them. The volume that contributes to the pattern development is another crucial element. Throughout the pattern's three sessions, a trader often looks for increasing volume, with the third day displaying the largest book.
=> Conclusion
The Morning Star candlestick signaled a bullish reversal, a triple candlestick formation. It forms at the bottom of a downtrend and signals that the downtrend is about to change direction. It comprises three candles: a bearish candlestick as the first, a bullish or bearish candle with a small body as the second, and a bullish candle as the third.
The morning star's middle candle reflects a period of market turbulence when bulls start to overtake bears. The third candle may indicate a new upswing, which validates the reversal. The evening star is the pattern that stands in opposition to the morning star and denotes the transition from an uptrend to a downturn.
Tip: Consider our definition and example of the term "bullish", if you want to learn more about the topic. On the other hand, our definition and example of the term "bearish" is a great help to dive deeper into the world of trading. Just follow this page and get all these definitions:
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