forex-scalping.com

Morning Star and Evening Star Patterns

Some candlestick patterns have survived for centuries because they capture a simple story: a trend loses strength, hesitates, and then turns. The morning star and evening star tell that story in three candles. Morning star (bullish reversal):
1. A large bearish candle continues the downtrend.
2. A small-bodied candle forms, showing hesitation.
3. A large bullish candle closes well into the body of the first candle.

Evening star (bearish reversal):
1. A large bullish candle continues the uptrend.
2. A small candle shows hesitation.
3. A large bearish candle closes well into the first candle's body.

How to use them wisely:

- They matter most at key levels, such as an order block, support, resistance, or after a liquidity sweep.
- Check the higher-timeframe bias. A morning star in a strong downtrend carries less weight.
- Wait for the third candle to close before acting.
- Place your stop beyond the middle candle's extreme.
- Target the next logical level.

Honest note: candlestick patterns don't predict the future. They offer clues about changing sentiment, and their value depends on location and confirmation.

Scroll through your chart and mark ten morning or evening stars. Count how many occurred at meaningful levels, and compare the outcomes of those versus the rest.

On intraday forex charts these patterns need a slightly different reading from the textbook version. The classic stock-market star has a gap around the middle candle, which almost never happens within the forex week. And on the H1, the small middle candle is often just the quiet hour before the London open or a release, not real hesitation. I'd only count stars where the middle candle formed during active hours; those are the ones where the pause actually meant something.

Morning and evening stars are more reliable at key levels than in the middle of a move. A practical filter: the third candle should close beyond the midpoint of the first candle's body, ideally with above-average size. A small third candle that barely enters the first body is a weak version.

In forex, the "gap" between candles described in classic candlestick books rarely appears on intraday charts, because the market trades continuously. So the middle candle's small body is what matters, not a gap. Testing the pattern only at previous day or week highs and lows tends to give much better results.

FXS Prop Desk's filter for a large third candle pulls against the stop rule in the opening post. The bigger the third candle, the further the entry sits from the middle candle's extreme, so the strongest looking stars carry the worst risk.

Rough numbers from an H1 evening star on GBPUSD help here. A 6 pip middle candle followed by a 28 pip bearish third candle, with entry at its close and a 3 pip buffer, puts the stop about 37 pips away, and the next level has to be 75 pips off for 1:2.

What I do instead is wait for a pullback into the third candle. A retrace of around 40 percent of its body usually comes within a few hours, and it takes about a third off the risk without moving the stop.

The fill rate is the cost. Roughly one in three of those stars never pulled back and ran without me, which I log as a miss rather than chase.

LondonNewsTrader's point about the quiet hour shows up in my notes as well. Stars whose middle candle was the 06:00 or 07:00 London bar on H1 did noticeably worse, since the third candle was often just the open arriving.