What it is
A morning star is a three-candle bottoming formation: a long down candle, then a small-bodied candle that stalls below it, then a strong up candle that closes well into the body of the first, traditionally beyond its midpoint. The evening star is the same structure inverted at a top.
How it works
The original Japanese description expects the middle candle to gap away from the first and the third to gap back, isolating the small body as a star. Contemporary markets that trade continuously rarely produce those gaps, so most charting software uses a relaxed definition based on body overlap. This matters in practice: the strict and loose versions identify different sets of bars, and comparing results across platforms without checking which rule is implemented is a common source of confusion.
How traders use it
The sequence describes a handover. Heavy selling, then a session in which the sellers cannot extend the move, then decisive buying that undoes most of the damage. It is more informative than a single candle because it shows the transition rather than a snapshot, and it carries the most weight at a tested support zone, after an extended decline, with visible volume expansion on the third candle.
Where it breaks down
Stops sit below the low of the star, which on a volatile three-bar structure can be a long way from the entry and can make an otherwise appealing read uneconomic. As with all candlestick formations, the pattern describes what has already happened and offers no probability of continuation on its own; without a level, a trend context and a risk plan it is decoration.
Educational reference. This entry describes how a concept is defined and used. It is not investment advice, not a recommendation, and not a signal. Any rule you build from it should be tested with realistic costs before it is traded, and no historical result guarantees a future one.