Three candles, one price, and no waiting for a fourth

Draw support at the lowest low of the three candles, wick included. That's usually the middle candle's low, though sometimes the first candle reaches lower. Whichever extreme is lowest, that's the price.

Use the extreme, never a body or a close. The wick shows where buyers actually stepped in. A level drawn at a close sits above the real turn and invites a stop that's too tight.

Draw it as a single line rather than a zone. A recognised pattern earns a line of its own, even when other lows sit nearby.

Then extend it right. The level now works both ways. Price holding above it is a reason to look for longs, and a candle close below it ends the idea.

A morning star is a reversal pattern, so it needs something to reverse. It only counts after price has been falling. The same three candles inside a sideways range, or halfway up a rally, are just three candles.

This is the first thing to check when a morning star fails. Look left and ask what the trend was before it formed. Often there wasn't a decline worth the name.

How far price must fall first has no fixed number. A run of lower highs and lower lows into the pattern is the plain reading. If you have to squint to see the downtrend, there isn't one.

The mirror rule applies to the evening star, its bearish twin. It needs a rise before it, and its level sits at the highest high of the three candles.

First, a long down candle that continues the decline. Second, a small-bodied candle of either colour. It shows the selling has stalled and neither side is in charge.

Third, a long up candle that closes past the midpoint of the first candle's body. That close is the test. A third candle that stops short of the midpoint hasn't taken back enough ground.

Here's a worked example. The first candle opens at 52.00 and closes at 49.00, so its body midpoint is 50.50. The middle candle trades between 48.40 and 49.20. The third closes at 50.90, past 50.50, so the pattern qualifies and support is 48.40.

How small the middle body must be is a judgment call. If the middle candle looks like a decision in either direction, treat the pattern as weaker.

The pattern is complete when the third candle closes. Waiting for one more green candle, then another, feels safer. It moves your entry away from the stop until the trade no longer pays.

Use the example. Support is 48.40 and the next resistance on your map is 51.60. Buy a pullback at 48.80, and you risk 0.40 to make 2.80, which is seven to one.

Buy at the third candle's close of 50.90 instead, and you risk 2.50 to make 0.70. Same pattern, same level, and now the trade can't pay for its risk.

The latest entry that still pays two to one is the price where the reward is twice the risk. Here that works out to 49.47. Mark it on the chart and don't chase past it.

Once you're in, the level is your stop, and a candle close below it is the exit. A wick that dips through and snaps back is price testing the level. That's what support looks like when it works.

So your real loss can be bigger than the distance to the line. If a candle closes at 48.10, you're out at 48.10 or worse. Size the position for that worse fill.

A close-based stop also needs watching. A resting stop order triggers on the wick, which defeats the rule. Either watch the chart at each close, or accept the odd wick-out as the price of automation. Decide which chart's close counts before you enter.

Draw morning stars on the daily, 4-hour and 1-hour charts. On forex the session barely pauses, so the candles rarely gap, but the midpoint test is unchanged.

Run through this list on the chart where you found the pattern, before the next candle opens. Every item is a yes or a no, and one no means no trade.

If the first item fails, stop right there. A morning star without a decline before it gives you a level you have no reason to trust. Every number after that would be built on nothing, however tidy it looks.

The last three items are about the order itself. They're the ones that get skipped when the third candle looks strong and you want in right now. A strong candle is the moment the list matters most, so read it slowly. The pattern will still be there in ten seconds.