I love the morning and evening star setups, especially at the lower time frames(1H and 4H). The high and tight flag is my favorite pattern and helped me achieve a 1:18 RR for a profit of 95% a few months back. That high RR only happened because two high and tight flags formed during the trade and signaled me to not only keep the trade open but helped me to decide to pyramid into more positions. I closed the trade with twice the positions than when I entered, and my account had almost double in 4 days.
Definition of ‘Morning Star’
A bullish candlestick pattern that consists of three candles that have demonstrated the following characteristics:
1. The first bar is a large red candlestick located within a defined downtrend.
2. The second bar is a small-bodied candle (either red or white) that closes below the first red bar.
3. The last bar is a large white candle that opens above the middle candle and closes near the center of the first bar’s body.
A morning star pattern can be useful in determining trend changes, particularly when used in conjunction with other technical indicators. Many traders also use price oscillators such as the MACD and RSI to confirm the reversal.
Definition of ‘Evening Star’
A bearish candlestick pattern consisting of three candles that have demonstrated the following characteristics:
1. The first bar is a large white candlestick located within an uptrend.
2. The middle bar is a small-bodied candle (red or white) that closes above the first white bar.
3. The last bar is a large red candle that opens below the middle candle and closes near the center of the first bar’s body.
As shown by the chart below, this pattern is used by traders as an early indication that the uptrend is about to reverse.
Evening star formations can be useful in determining trend changes, particularly when used in conjunction with other indicators. Many traders use price oscillators and trendlines to confirm this candlestick pattern. It was price action at its best!