In trading, a morning star is a pattern that is essentially a grouping of three candles - a tall black candlestick, a miniature black or white candlestick accompanied by a short body and long wicks along with a third white and tall candlestick. 

The pattern of a morning star is usually deciphered as a bullish sign by technical analysts. In the morning star pattern stocks, the first candle which is a bearish candle where the sellers are in control pushes the price to the bottom and closes near the lows. Therefore, this candle informs that the sellers are in control. The second candle does not continue with the downside, this tells us that both the buyers and sellers are in equilibrium. The third candle seals the deal by closing near the heights. 

Traders identify candlestick patterns like this to use in their trades, usually in high volatility coins like altcoins to take advantage to the high movement swings. Here are some of the best altcoins traders usually start with.  

How to spot a morning star on crypto charts?

• Identify the bottom [terminating point of the bearish trend]:  identify a bearish trend in the chart, which is easy and can be spotted by noticing lower lows in the price. Finding the bottom is important, bottom means the end of the bearish trend from which the bulls could reclaim momentum. 
• Find the three candles: once the price gets to the bottom, we should identify the three candles. At this stage, the second candle ought to be smaller than the first and is supposed to open with a bearish gap [the bearish gap is not compulsory]. If the body of the second candle abides within 50% of the body of the first candle, the orientation is found rational. 

The difference between a Morning star and an evening star

The reverse orientation of a morning star is called the evening star. The evening star forms at the peak of a cost increase, denoting that the uptrend approaching its end where the potential reversal is nearing. The evening star indicates that the buyers have crashed, the sellers are in control of the market while the morning star specifies that sellers have crashed and the buyers are in dominance. From a crucial extend of support, the morning star pattern shows the future of traders to initiate long positions. The evening star pattern on the other hand, at a prime resistance level gives information for traders to short a position. 

The difference between a Morning star and a Doji morning star

The morning star occurs in slight variation. At the point where the price action is quite flat in the middle [short, black candlestick] the candlestick, appears as a Doji. The key difference of a Doji morning star is, it shows the lack of resolution more precisely in the market when compared to a norming star with a thicker middle candle. 

What are the advantages of using a morning star pattern?

• No pattern is 100% flawless, while the morning star pattern is likely to do better than others. 
• The candlestick pattern can be utilized in all assets counting currencies and stocks 
• They are used as reversal indicators.

What are the limitations of using the morning star pattern?

• As the morning star is a union of three candlesticks, most of the time, it is nearly impossible to find on a chart. There is a risk of losing the trade if the price covert the trend direction before three days. 
• There is no assured movement. Despite keeping in pace with all the laws, there is always a probability of hitting the stop loss. 
• In a volatile market stet-up, there is a risk factor of being paused at a breakeven. 

How dependable is the morning star pattern?

Morning star is a powerful candlestick pattern, and the majority of traders use it in their trading scheme. Anyhow, in financial trading, no pattern can promise you a 100% profit. This efficiency of the pattern helps traders understand the current situation in the market, enabling them to predict what might happen next. In addition, the reliability further relies on how the candles are launched. If the third candle banishes the cost action of the first and second candles by submerging the price action, traders can interpret the buying probability to be solid. The morning star success rate mainly depends on the price drift, levels, candle shaping as well as market sentiment.