Modified morning and evening stars

The Modified morning and evening stars indicator identifies specific three-bar candlestick reversal patterns enhanced with volume convergence to provide high-probability signals for positional trading.

Usage

The indicator is designed to highlight trend reversal opportunities by identifying modified versions of the classic Morning Star and Evening Star patterns.

• Morning Star (Bullish): Look for this pattern at the bottom of a downtrend. It signals a potential shift from bearish to bullish sentiment, especially when the third candle closes with high volume and above the average of the first candle's range.
• Evening Star (Bearish): Look for this pattern at the top of an uptrend. It signals a potential shift from bullish to bearish sentiment, confirmed by a bearish third candle with high relative volume.

Users should look for "MgStar" labels for bullish entries and "EvStar" labels for bearish entries, ideally in the context of established price trends.

Details

This modified version of the standard star patterns incorporates several filters to increase reliability:

1. Doji/Rejection Detection: The second candle must exhibit low body-to-wick ratios, signifying indecision or price rejection.
2. Volume Convergence: The final candle in the pattern must have volume greater than its 20-period Simple Moving Average (SMA) and greater than the volume of the preceding two bars.
3. Price Positioning: The third candle must close significantly beyond the midpoint of the first candle's range to confirm the reversal strength.
4. Candle Health: The script uses a "Bull Percentage" calculation to ensure the closing candle represents a strong directional move (e.g., closing in the top 40% of the range for bullish patterns).

Settings

As this script is logic-driven based on fixed price action and volume criteria, the primary interactions are through visual observation. The underlying logic uses:

• volMa: A 20-period SMA used to determine if the breakout volume is significant.
• avgBarSize: A 20-period SMA of candle bodies used as a baseline for volatility.
• Bull Percentage: A calculation of (Close - Low) / (High - Low) to determine candle sentiment.

FAQ

How do I interpret the MgStar and EvStar labels?

The "MgStar" label represents a Modified Morning Star (bullish reversal), while the "EvStar" label represents a Modified Evening Star (bearish reversal).

Why doesn't every star pattern show up?

This indicator uses "modified" logic which requires specific volume convergence and candle health metrics to be met. If the volume is low or the third candle's close is weak, a signal will not be generated.

How can I access the Modified morning and evening stars indicator?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.