Notices

Evening Star

From Traderpedia

This is the bearish counterpart of the Morning Star and is made up of three candlesticks forming a top reversal signal.

Image:Evestar.jpg

In an uptrend, the first candlestick of this formation, will be a long white candle - which will convince any bulls that the rally is continuing. Next a Doji or 'star' - a candle with a very small body - will appear. This candle will gap up from the previous candles closing price. The 'stars' body can be either clear or solid as this is not the important part of the candlestick formation - it is the gap which is the significant signal here. The third and final candle will be formed with a solid body of which the open price will gap down from the closing price of the Doji or star. It is this final candle that confirms the bulls have finally lost control of the uptrend. It would be normal to wait until this third candle has formed before opening a sell trade.