How the Morning Star candlestick pattern actually works (and when it means nothing)

Three candles:

1. A tall red day: sellers in control.

2. A small-bodied day that opens below day 1's close: sellers push, price barely moves.

3. A strong green day that closes well into day 1's red body: buyers take over.

Example: Day 1 ₹110 → ₹100. Day 2 ₹98 → ₹99. Day 3 ₹100 → ₹107, which recovers 70% of day 1's body.

Two details most explanations skip:

\- Nison's ideal version has a gap before AND after the middle candle. He notes the second gap is rare, and missing it doesn't weaken the pattern.

\- It needs a prior downtrend. The same three candles in a sideways market carry little information. It's more useful at a level where buyers stepped in before, but that part is judgement, not definition.

It's not a guarantee. Nison's own examples include a rally after a morning star that stalled within days.

Source: Steve Nison, Japanese Candlestick Charting Techniques. Example numbers, not advice.