The first part of a Morning Star reversal pattern is a large bearish red candle. On the first day, bears are definitely in charge, usually making new lows.
The second day begins with a bearish gap down. It is clear from the opening of Day 2 that bears are in control. However, bears do not push prices much lower. The candlestick on Day 2 is quite small and can be bullish, bearish, or neutral (i.e. Doji). Generally speaking, a bullish candle on Day 2 is viewed as a stronger sign of an impending reversal.
But it is Day 3 that holds the most significance. Day 3 begins with a bullish gap up, and bulls are able to press prices even further upward, often eliminating the losses seen on Day 1.Example:
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VEDL Weekly Chart (Before)
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| VEDL Weekly Chart (After) |
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