Morning & Evening Star Candlestick Patterns – How to Trade Market Reversals with Confidence

Jasper Osita - Market Analyst

2025-07-03 10:56:15

Goal of This Lesson

To help traders identify and understand the Morning and Evening Star candlestick patterns, why they are powerful signals for potential trend reversals, how to trade them in confluence with key levels, price imbalances, and timeframes, and how to maximize the probability of success using Smart Money Concepts.

What Are Morning and Evening Stars?

Morning and Evening Stars are three-candle reversal patterns that appear at the end of a trend, signaling a potential shift in control between buyers and sellers.

Morning Star: Appears at the bottom of a downtrend → potential bullish reversal
Evening Star: Appears at the top of an uptrend → potential bearish reversal

The Logic Behind These Patterns

These patterns are rooted in market psychology and order flow:

The first candle shows strong trend continuation.
The second candle reflects indecision or temporary exhaustion.
The third candle signals a decisive takeover by the opposing force.

The secret lies in the 3rd candle:

It’s usually a bullish engulfing (Morning Star) or bearish engulfing (Evening Star)
Sometimes, it may be a piercing line (bullish) or dark cloud cover (bearish) if it closes 50–61.8% into the first candle
This 3rd candle is the "shift candle" - the clearest signal that momentum has flipped

Why They’re Popular Among Traders

Easy to spot visually, even for beginners
Helps anticipate early reversals at exhaustion points
Can be combined with institutional price concepts (e.g., liquidity sweeps, FVGs)
Works well across Forex, Crypto, Stocks, and Indices

Structure of the Reversal Patterns

Morning Star (Bullish Reversal)

Bearish Candle: Strong downward move
Small/Doji Candle: Indecision (can gap down)
Bullish Candle: Closes deep into or above the first candle’s body (engulfing/piercing)

Evening Star (Bearish Reversal)

Bullish Candle: Strong upward momentum
Small/Doji Candle: Indecision (can gap up)
Bearish Candle: Closes deep into or below the first candle’s body (engulfing/dark cloud)

How to Spot a Real Momentum Shift

3rd candle is critical—without a strong close, it's just noise
Look for volume divergence: high on the 1st and 3rd candles, low on the middle
Confirm with market structure shift (MSS) or breakout/breakdown at the lower timeframe
Consider FVG creation after the 3rd candle as a powerful confirmation

Confluence: What Makes Them High-Probability

Key Levels
- Previous day/session highs/lows
- Support/resistance
- Institutional zones
Time-Based
- London/NY Open or Power of 3 sessions
- Asia liquidity sweep → London reversal
Liquidity Events
- Appears after a stop run of a support or resistance level
- Traps breakout traders → reverses with momentum

How to Trade the Pattern Effectively

Step 1: Mark Key Levels at the Higher Timeframe

Step 2: Once Price Reaches the Key Level & Creates the Pattern, Drop to Lower Timeframe

3. Wait for a Sideways Price Action and Mark It

4. Execute at Breakout. Target Next Key Level

Do’s and Don’ts of Trading Morning/Evening Stars

Do:

Wait for the 3rd candle to fully close
Look for a clear body that engulfs or pierces the first
Seek HTF bias confluence (D1/H4 trend)
Add FVG or MSS confirmations

Don’t:

Enter mid-pattern
Ignore context (news, time of day)
Chase without imbalance to re-enter
Forget stop placement—keep it logical

Real-Life Analogy

It’s like a courtroom trial:

The first lawyer dominates (first candle).
The judge pauses the case to hear both sides (doji).
The other lawyer drops evidence so strong that the jury flips (3rd candle = market shifts).

Add in the institutional signature (FVG)—and you’ve got a verdict backed by power.

Final Thought

In a world flooded with candlestick patterns, the Morning and Evening Star stand out not because they’re perfect, but because they reveal something deeper—a shift in conviction. But conviction alone isn’t enough. When paired with institutional clues like a Fair Value Gap and supported by market structure, these patterns become a complete story—not just a signal.

Don’t trade them because they look good. Trade them because they make sense in the right context, with real intent behind the move.

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This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

Author

Jasper has been in the markets since 2019 trading currencies, indices and commodities like Gold. His approach in the market is heavily accompanied by technical analysis and of course, supported by fundamentals. He has a background in trading proprietary firms and has been teaching students how to navigate themselves in the markets from basic to advance concepts.

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Prices are indicative only

Morning & Evening Star Candlestick Patterns – How to Trade Market Reversals with Confidence

Goal of This Lesson

What Are Morning and Evening Stars?

The Logic Behind These Patterns

Why They’re Popular Among Traders

Structure of the Reversal Patterns

Morning Star (Bullish Reversal)

Evening Star (Bearish Reversal)

How to Spot a Real Momentum Shift

Confluence: What Makes Them High-Probability

How to Trade the Pattern Effectively

Step 1: Mark Key Levels at the Higher Timeframe

Step 2: Once Price Reaches the Key Level & Creates the Pattern, Drop to Lower Timeframe

3. Wait for a Sideways Price Action and Mark It

4. Execute at Breakout. Target Next Key Level

Do’s and Don’ts of Trading Morning/Evening Stars

Do:

Don’t:

Real-Life Analogy

Final Thought

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