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Morning star pattern is a three-candle formation that is made up of the following candles:
The morning star pattern appears at the bottom of a down-trend so its purpose is to turn the current down-trend around in the upwards direction.
The rule of the morning star patter is as follows:
If the third, white candle closes at a price level below the mid-point of the first, black candle’s real body, the pattern does not qualify as a morning star.
In the chart below, we can see that the down-trend was halted by the appearance of the morning star pattern. After its appearance, the market changed direction as the bulls regained control.
The appearance of the morning star pattern turns the market focus around to the upwards direction.