Chartered Market Technician (CMT) Practice Exam 2025 - Free CMT Practice Questions and Study Guide

The Morning Star is a candlestick pattern that signals a potential reversal after a downtrend. This pattern consists of three candles: a long bearish candle, followed by a smaller body candle (which can be either bullish or bearish), and concluding with a long bullish candle. The first candle indicates strong selling pressure as the market is in a downtrend. The second candle, which has a smaller body, highlights indecision in the market, where sellers are potentially losing momentum. The final bullish candle confirms a shift in sentiment and a potential reversal, as the buyers step in and push prices higher.

This pattern is significant because it not only shows a shift in momentum from bearish to bullish but also the market psychology shifting from fear to optimism among traders. The presence of the long bullish candle after the downtrend is a strong signal that buyers are starting to take control, making it a valuable indicator for traders looking for potential entry points in an upward trend.

In contrast, the other patterns mentioned may have different implications or may occur in different contexts. For instance, while the Hanging Man and Inverted Hammer can also indicate possible reversals, they do so mostly at the end of an uptrend rather than after an established downtrend. The Runaway Gap typically indicates a continuation