Morning Star and Evening Star Strategy: Candles to Expect, Entry and Stop

What it is

The morning star is a three-candle bullish reversal that appears after a decline; the evening star is its bearish mirror after a rally. A big candle, a small indecision candle, then a big candle the other way show momentum being absorbed and then reversed.

Why it can work

The small middle candle shows the prior move has run out of steam; the third candle shows the other side taking control. When this happens at support or resistance, many traders see the same signal, which adds follow-through.

The candles to expect

• Candle 1: a large candle in the direction of the prior move (at least about 0.8 ATR).
• Candle 2 (the star): a small body, showing indecision. Its low (morning) or high (evening) should be the extreme of the three candles.
• Candle 3: a strong candle the other way that closes beyond the middle of candle 1.
• Location: at a swing support (morning) or resistance (evening), after a clear move into it.

Step-by-step entry

1. Look for a decline into support (or a rally into resistance).
2. Wait for the big first candle, then the small star candle.
3. Wait for the third candle to close beyond the middle of the first.
4. Place a buy stop just above candle 3's high (sell stop below its low) so the market confirms the reversal.
5. Stop just beyond the star's low (or high).
6. Target the next level for at least 2R.
7. Risk 1% or less and skip stars that form in open space.

Stop and target

Stop: just beyond the star candle's extreme (a small buffer, about 0.15 ATR). Target: the next swing level, or three times the risk. Skip trades under 2R.

Common mistakes

• Trading a star that has no support or resistance behind it.
• Entering before candle 3 closes.
• Treating a three-candle pause inside a strong trend as a reversal.
• Using a stop that is too tight: noise takes it out before the idea can work.

Frequently asked questions

Does the star have to gap?

No. Gaps are rare in forex. What matters is the small body of the middle candle and the strong third candle.

Which timeframe works best?

Higher timeframes (1-hour and above) give more reliable stars because more traders see them.

Scan for it automatically

Choose this strategy in the Forextity scanner. It looks for the pattern on real candles, marks it on the chart, shows an example entry, stop, target and reward-to-risk, scores how many conditions are met, and lists the same steps with the same candle diagrams. You can also test it on your pair in the Strategy Backtester. High reward-to-risk strategies win less than half the time, so size every trade small and see the Stress Test.

Risk notice: educational content, not financial advice. Leveraged trading carries a high risk of loss. Read our Risk Disclaimer.