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EVENING STAR
( Sankawa Yoi No Myojyo )
Description
The Evening Star pattern is a top reversal signal. It is exactly the opposite of the Morning Star signal. Like the planet Venice , the evening star, it foretells that darkness is about to set or that prices are going to go lower. It is formed after an obvious uptrend. It is made by a long white body occurring at the end of an uptrend., usually when the confidence has finally built up. The following day gaps up, yet the trading range remains small for the day. Again, this is the star of the formation. The third day is a black candle day and represents the fact that the bears have now seized control. That candle should consist of a closing that is at least halfway down the white candle of two days prior. The optimal Evening Star signal would have a gap before and after the star day.
Criteria
- The uptrend has been apparent.
- The body of the first candle is white, continuing the current trend. The second candle is an indecision formation.
- The third day shows evidence that the bears have stepped in. That candle should close at least halfway down the white candle.
Signal Enhancements
- The longer the white candle and the black candle, the more forceful the reversal.
- The more indecision that the star day illustrates, the better probabilities that a reversal will occur.
- A gap between the first day and the second day adds to the probability that a reversal is occurring.
- A gap before and after the star day is even more desirable. The magnitude, that the third day comes down into the white candle of the first day, indicates the strength of the reversal.
Pattern Psychology
A strong uptrend has been in effect. The buyers can’t imagine anything going wrong, they are piling in. However, it has now reached the prices where sellers start taking profits or think the price is fairly valued. The next day all the buying is being met with the selling, causing for a small trading range. The bulls get concerned and the bears start taking over. The third day is a large sell off day. If there is big volume during these days, it shows that the ownership has dramatically changed hands. The change of direction is immediately seen in the color of the bodies.
Training Tutorial
The Morning Star & Evening Star Signals This 56 minute video provides a clear understanding for trading and maximizing your profits.
Candlestick Forum Flash Cards These unique Flash Cards will allow you to be “trading like the Pro’s” in no time.
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