One of the favorite patterns of traders in trading is Morning star candlestick pattern. In this tutorial, we will find how to identify this pattern and use it in trading in Binomo.
What is Morning Star candlestick pattern? How to identify it
Morning Star is a pattern of 3 candlesticks. This pattern often appears at the end of a downtrend. This is one of the strongest signals with high accuracy.
Morning Star pattern definition
There are 3 candlesticks in Morning Star pattern. These are their features:
The first candlestick: A bearish candlestick (red candlestick).
The second candlestick: a small body candlestick (Spinning Top or Doji candlestick).
The third candlestick: a bullish candlestick (green candlestick) with the body as long as the half of the body of the first candlestick.
How to use Morning star candlestick pattern when trading in Binomo
This is a bullish reversal pattern. Morning star is seen as a sign to buy orders when combining it with other reversal indicators. These are some combinations.
To make an effective combination with this candlestick pattern, you need to set up a 5-minute candlestick chart in Binomo. The expiration time should be from 15 minutes.
Morning Star candlestick pattern and the support level
Buy UP orders when 2 conditions appear:
- The price tests the support level
- Morning Star pattern appears.
Explain: When the price tests the support level, it will be very likely to reverse. Morning star pattern appears as a sign for the reversal.
Example: The pair of AUD/USD currency
Morning Star pattern and RSI indicator
How to enter a trade = RSI is at the oversold zone (30) + The market creates a Morning Star candlestick pattern.
Explain: When RSI indicator is at the oversold zone, the price will likely bounce back to the uptrend. If the Morning Star pattern appears, the price will definitely rise again.
For example, EUR/USD pair.
We have shown you how to identify as well as how to use Morning Star candlestick pattern. Apart from the 2 strategies, you also can combine it with other reversal indicators such as Bollinger bands or Stochastic. You can make yourself get used to this pattern by creating a demo account here.