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Turnover Strategy
For those who have already mastered the Pin Bar strategy and would like to further increase the success rate of their system, it is possible to focus on a strategy called Turnover. It consists of two main candlestick formations namely, the Morning Star, a formation indicating a potential price increase, and the Evening Star, a formation indicating a potential price decline. As with the Pin Bar strategy, there are certain rules here that distinguish valid from invalid signals. So, what are they?
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Morning Star
The Morning Star formation appears during a downtrend, signaling a possible reversal upward. It consists of three candles. The first is a long red candle, confirming the continuation of bearish price pressure. The second candle is small and expresses neutrality. The third and final candle is a long green one that closes significantly higher than the previous candle, ideally also above the first red one. For traders, the Morning Star indicates that the bearish trend is weakening and that buying opportunities are emerging. It is important to note that the formation has the highest probability of success when it appears near a strong support level or after a period of significant decline.
Evening Star
The Evening Star is the direct opposite of the Morning Star. It appears at the end of an uptrend and signals a possible reversal downward. This formation also consists of three candles. The first is a long green candle, the second is again neutral, and the third is a long red candle, ideally closing below the first candle. Just like the Morning Star, the best use of this formation for entering sell positions is when it forms near a key resistance zone and in the premium zone—at relatively high levels after which a correction or complete trend reversal usually occurs.
What Complements the Turnover Strategy?
As mentioned above, both the Morning Star and Evening Star formations are most effective when they occur at key technical levels such as support and resistance zones, or when confirmed by other indicators such as RSI or Stochastic, which we have also covered in our section. However, it is once again important to remember that no formation is 100% reliable. Therefore, it is always advisable to combine these formations not only with other technical parameters but also with risk management rules, for example, not risking more than 2% of capital on a single trade.
Conclusion
The Morning Star and Evening Star formations rank among the most reliable candlestick signals for potential trend reversals. Traders should, however, keep in mind that their nature is somewhat more complex than the Pin Bar itself, so it is advisable to start with the latter and only then move on to the Turnover strategy.