Is it credible if the morning star but the volume does not increase?

The morning star candlestick pattern suggests a potential bullish reversal, but its reliability increases with rising volume on the third candle.

Jun 26, 2025 at 08:22 am

Understanding the Morning Star Candlestick Pattern

The morning star is a popular candlestick pattern used by traders to identify potential reversals in a downtrend. It consists of three candles: a large bearish candle, followed by a small-bodied candle (often a doji or spinning top), and then a large bullish candle that closes within the range of the first candle. This formation suggests that selling pressure is weakening and buyers may be entering the market.

However, one critical aspect that many traders consider when confirming this pattern is volume. Typically, traders expect an increase in volume during the third candle to confirm the strength of the reversal. When the morning star appears without a corresponding rise in trading volume, it raises concerns about the credibility of the signal.

Important: The absence of increased volume doesn't automatically invalidate the morning star, but it does require additional scrutiny.

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The Role of Volume in Technical Analysis

Volume plays a crucial role in validating price action and chart patterns. In general, rising volume indicates strong participation from market players, which can give more weight to a technical signal. When analyzing the morning star pattern, traders often look for a surge in volume on the third candle to support the idea that bulls are stepping in with conviction.

If the volume remains flat or even declines during the formation of the morning star, it could suggest that the buying pressure is not strong enough to sustain a meaningful reversal. This lack of confirmation can lead to false signals and potentially misleading trade setups.

• Flat volume might indicate indecision among traders.
• Declining volume may point to weak interest in the bullish move.
• Rising volume typically strengthens the reliability of the pattern.

Therefore, while the morning star can still appear under low-volume conditions, its effectiveness as a reversal indicator diminishes without supporting volume.

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Why Volume Might Not Increase During a Morning Star Formation

There are several reasons why the volume might not increase during the formation of a morning star:

• Market consolidation after a sharp downtrend may result in lower volume as participants take a pause.
• Institutional accumulation could occur subtly, without significant spikes in volume visible on retail charts.
• Lack of broad market interest might mean that only a few traders are participating in the reversal attempt.
• Timeframe discrepancies — sometimes, the daily chart shows a morning star, but the volume reflects lower timeframes where activity is muted.

These scenarios illustrate that the absence of volume growth doesn't always mean the pattern is unreliable. However, they also highlight the need for additional filters or tools to assess the validity of the signal.

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How to Evaluate the Morning Star Without Rising Volume

When volume doesn't rise alongside the morning star, traders should adopt a more cautious approach. Here are some strategies to help evaluate the situation:

• Look at previous volume behavior — compare current volume levels with historical averages to determine if it's unusually low.
• Check for confluence with other indicators like moving averages, RSI, or Fibonacci retracement levels to strengthen the signal.
• Analyze higher timeframes to see if there's a broader trend or structure supporting the reversal.
• Monitor order flow and depth if possible, especially in markets where such data is available.
• Use risk management techniques such as tighter stop-loss placements or reduced position sizes when volume is low.

By incorporating these additional layers of analysis, traders can better judge whether a morning star without rising volume is worth acting upon.

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Practical Steps for Trading the Morning Star With Low Volume

Here’s a practical guide to approaching this scenario:

• Step 1: Identify the morning star pattern clearly on your chart. Ensure all three candles meet the criteria.
• Step 2: Check the volume profile for the third candle. Compare it with the average volume over the past 10–20 periods.
• Step 3: Look for nearby support or resistance zones that align with the reversal attempt.
• Step 4: Confirm with at least one other indicator, such as RSI showing oversold conditions or MACD turning positive.
• Step 5: Consider waiting for a follow-through candle before entering the trade to filter out false signals.
• Step 6: Place a stop-loss just below the lowest point of the pattern to manage risk effectively.

This method helps traders avoid impulsive decisions based solely on the morning star pattern, especially when volume doesn’t confirm the reversal.

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Frequently Asked Questions

Q: Can I trust a morning star pattern in crypto markets without volume confirmation?

A: While the morning star can appear in crypto markets without rising volume, it’s generally less reliable. Cryptocurrencies are highly volatile and often experience erratic volume patterns, so traders should use additional tools for validation.

Q: Is it possible for a morning star to form during a sideways market?

A: Yes, the morning star can appear during consolidation phases. However, the lack of a clear downtrend may reduce its predictive power. Traders should assess the broader context carefully.

Q: Should I ignore a morning star entirely if volume doesn’t increase?

A: No, you shouldn’t ignore it outright. Instead, treat it as a potential signal that requires further confirmation through price action, other indicators, or volume trends across multiple timeframes.

Q: How does the morning star differ from the hammer candlestick pattern?

A: The morning star is a three-candle pattern indicating a potential bottom reversal, while the hammer is a single candle with a long lower shadow suggesting rejection of lower prices. Both are bullish reversal signals, but they differ in structure and interpretation.