Evening Star |
Characteristic of Candlesticks: Reversal
Relevance of Candlesticks: Bearish
Prior Trend of Candlesticks: Bullish
Reliability of Candlesticks : 1st Grade
Confirmation of Candlesticks: Highly Reliable
Candlestick Patterns Key Reference |
Forex Chart (EURUSD)
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DESCRIPTION
The Evening Star is a top reversal pattern.
Its is aptly named because the Evening Star (the planet Venus) appears just before darkness sets in.
Evening Star formation is one of the most reliable candlestick pattern for reversing from a uptrend to an downtrend.
PATTERN RECOGNITION
1. Evening Star pattern can be identified by a uptrend followed by a top reversal.
2. Refering to above diagram, firstly we will see a long bullish candlestick.
3. Secondly we will see a small candlestick (regardless of bullish or bearish candlesticks) followed by a gaps higher in the direction of the previous uptrend.
4. Finally we will see a long bearish candlestick that moves well within the first period's of the long bullish candlestick.
EXPLAINATION
Firstly we will see bullish candlesticks in a raising market suggesting that the bulls are in command.
Secondly we will see a small real body appears which imply the incapacity of buyers to push the market higher.
Finally we will see a strong bearish candlestick of third session which proves that bears have taken control.
An ideal bearish Evening Star pattern is prefered with a gap before and after the second session of the candlestick.
The second gap is rare, but lack of it does not take away from the power of this formation.
The 1st grade reversal patterns are the most reliable group of reversal patterns that seldom require any confirmation.
POINT TO NOTE
Stars are small candlestick at the top of uptrend which can more than one, two or even three.
The color of the star (bullish or bearish candlestick) and its gaps are not important.
The reliability of this pattern is very high, but we need confirmation in the form of a bearish candlestick with a lower close or a gap down is most suggested.
CANDLESTICK PATTERNS KEY REFERENCE
Irrespective of Color (Can be bullish or bearish) |
Uptrend |
Consolidation |
Downtrend |
ANTICIPATED DIRECTION OF TREND
Lighter Arrow = Lower Probability
Solid Arrow = Higher Probability
More Likely to go sideway, Less likely to rally
|
More likely to rally, Less likely to go sideways
|
More likely to go sideway, Less likely to fall
|
More likely to fall, Less likely to go sideways |
