Candle Decoder

More Reversal Signals — Chart Patterns

The spinning top, and the three-candle morning star / evening star reversal. This lesson covers: What you'll learn, The spinning top, Tug of war, The morning star, Name it, The evening star, The mirror image, Put it together.

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Going deeper

More on more reversal signals

Three-candle patterns like the morning and evening star are more demanding than single-candle signals precisely because they require a sequence: exhaustion, indecision, then a decisive move the other way.

That sequence is the useful part. It describes a handover of control taking place over time rather than in one candle, which is generally what a genuine turn looks like.

Common mistakes3
  • Calling any three candles a star pattern. The middle candle must show genuine indecision, and the third must close meaningfully into the first.
  • Looking for reversal patterns while ignoring whether there is anything to reverse. These need a prior trend to be meaningful.
  • Treating the pattern as the trade. It is one input to a read, not an entry in itself.
From experience2
  • Check where the third candle closes. Deep into the first candle's body is a much stronger signal than a marginal close.
  • Reversal patterns forming into a level are worth attention; the same pattern in open space usually is not.
Questions people ask2

How is a morning star different from a bullish engulfing?

An engulfing pattern is two candles and immediate. A morning star is three and shows exhaustion, then pause, then reversal — a slower handover.

Does the middle candle have to gap?

Classical definitions require a gap, which suits stocks. On a nearly 24-hour instrument like US30 gaps are rare, so the practical requirement is a small indecisive body.