WEBVTT 00:02.670 --> 00:06.660 This video how to treat morning in the evening star patterns. 00:06.710 --> 00:15.230 So these are three candlestick patterns and essentially what you have is a situation where you get a 00:15.230 --> 00:16.410 couple of gaps. 00:16.430 --> 00:22.400 So three days for example where you get long candlestick. 00:22.400 --> 00:23.350 This would be bullish. 00:23.360 --> 00:26.120 This could be bullish or bearish. 00:26.120 --> 00:30.920 And as example and this would definitely be bearish. 00:30.990 --> 00:35.800 This is what is known as an evening star out. 00:35.850 --> 00:38.830 It's nighttime shows negativity. 00:38.910 --> 00:42.320 But you have the gap there and the gap there. 00:42.420 --> 00:44.160 The Wicks can cross each other. 00:44.160 --> 00:47.000 It's just a matter of the gaps being there. 00:47.020 --> 00:54.920 Now Morningstar course would be the exact opposite and you can see that you would have a negative candlestick 00:54.920 --> 00:56.000 here. 00:56.150 --> 00:58.550 Candlestick here then could be positive or negative. 00:58.550 --> 01:04.130 That's the thing the star itself doesn't really matter other than it's very small compared to the other 01:04.130 --> 01:15.450 candlesticks or it shows a lack of momentum I should say and then you have a gap above and it shows 01:15.450 --> 01:16.080 a reversal. 01:16.080 --> 01:24.090 Now these candlestick patterns you have to think about what they show when they they show here in this 01:24.090 --> 01:31.920 one we're in an uptrend so we're going higher for a while and on this day we get a bit of a move. 01:31.980 --> 01:36.500 And then we gap higher and that should be a continuation of the trend. 01:36.690 --> 01:39.630 But things don't really take off that day. 01:39.630 --> 01:41.520 And then the next day Gap's down. 01:41.520 --> 01:45.030 Well that's a sign that things could be changing. 01:45.070 --> 01:47.000 It's a very bearish signal. 01:47.020 --> 01:52.240 You simply put your stop loss on the other side of the Three Bar pattern and you take a short base upon 01:52.270 --> 01:55.810 a break of the Three Bar pattern herself. 01:55.810 --> 02:00.820 So the longest candlestick in this case it would actually be underneath here you would start shorting 02:02.500 --> 02:09.200 causes a little bit wider stops at times but it's generally thought that you should get a bigger move. 02:09.280 --> 02:16.480 Now here in this one the morning star the star is going to rise and the bullish you can see that we 02:16.480 --> 02:22.510 drop and then this day things drop a little further than we get a little bit of a gap lower which should 02:22.510 --> 02:23.440 be a continuation. 02:23.440 --> 02:26.020 But the market really doesn't move that day. 02:26.140 --> 02:28.510 Then the third day we get up higher. 02:28.510 --> 02:32.980 Break above the top of the candlestick pattern the three candlestick pattern Stop Loss underneath it 02:33.580 --> 02:41.230 and you swing for a trend change so here is an example of a morning star. 02:41.230 --> 02:44.260 You can see that this candlestick was negative. 02:44.260 --> 02:46.170 We closed up here we gapped lower. 02:46.200 --> 02:52.270 But we had a pretty tight range here and then gas tire you can see that was in fact beginning of a pretty 02:52.270 --> 02:54.870 significant move based upon the morning star. 02:54.970 --> 02:59.850 You know your first target would have been the next resistance level very easily made. 03:00.160 --> 03:03.960 This resistance level and then this resistance level. 03:04.090 --> 03:11.490 So certainly you hit all of your targets over here and Yum Brands we have a Evening Star because we 03:11.490 --> 03:15.010 have a long candlestick here at the top of a trend. 03:15.010 --> 03:19.960 We have a neutral candlestick after the gap and then we have a gap lower. 03:19.960 --> 03:23.830 So that is an evening star. 03:23.860 --> 03:26.890 Some people would even call it a shooting star. 03:26.890 --> 03:31.150 But in this case since there's two gaps it's technically an evening star. 03:31.150 --> 03:33.510 You can see that we fell right to where support would be. 03:33.520 --> 03:38.860 And then eventually broke down through it stop loss would go on the other side of the pattern like I 03:38.940 --> 03:44.400 talked in this case you would take a break of the three candlestick pattern right there. 03:44.430 --> 03:49.770 You had a pretty quick move about one and a half times your risk and then you eventually broke down 03:49.770 --> 03:51.510 rather significantly. 03:51.510 --> 03:58.920 These are generally only found on daily charts because of the gaps needed but unless of course you're 03:58.920 --> 04:03.570 trading in a very illiquid stock in a short time frame then you can see these all over the place and 04:03.570 --> 04:04.880 they don't mean as much. 04:04.920 --> 04:12.270 You do need a liquid stock something in the trades decent volume both of these high end in Yum Brands 04:12.270 --> 04:14.760 would certainly fall in that category.