This video how to treat morning in the evening star patterns.
So these are three candlestick patterns and essentially what you have is a situation where you get a
couple of gaps.
So three days for example where you get long candlestick.
This would be bullish.
This could be bullish or bearish.
And as example and this would definitely be bearish.
This is what is known as an evening star out.
It's nighttime shows negativity.
But you have the gap there and the gap there.
The Wicks can cross each other.
It's just a matter of the gaps being there.
Now Morningstar course would be the exact opposite and you can see that you would have a negative candlestick
here.
Candlestick here then could be positive or negative.
That's the thing the star itself doesn't really matter other than it's very small compared to the other
candlesticks or it shows a lack of momentum I should say and then you have a gap above and it shows
a reversal.
Now these candlestick patterns you have to think about what they show when they they show here in this
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.
And then we gap higher and that should be a continuation of the trend.
But things don't really take off that day.
And then the next day Gap's down.
Well that's a sign that things could be changing.
It's a very bearish signal.
You simply put your stop loss on the other side of the Three Bar pattern and you take a short base upon
a break of the Three Bar pattern herself.
So the longest candlestick in this case it would actually be underneath here you would start shorting
causes a little bit wider stops at times but it's generally thought that you should get a bigger move.
Now here in this one the morning star the star is going to rise and the bullish you can see that we
drop and then this day things drop a little further than we get a little bit of a gap lower which should
be a continuation.
But the market really doesn't move that day.
Then the third day we get up higher.
Break above the top of the candlestick pattern the three candlestick pattern Stop Loss underneath it
and you swing for a trend change so here is an example of a morning star.
You can see that this candlestick was negative.
We closed up here we gapped lower.
But we had a pretty tight range here and then gas tire you can see that was in fact beginning of a pretty
significant move based upon the morning star.
You know your first target would have been the next resistance level very easily made.
This resistance level and then this resistance level.
So certainly you hit all of your targets over here and Yum Brands we have a Evening Star because we
have a long candlestick here at the top of a trend.
We have a neutral candlestick after the gap and then we have a gap lower.
So that is an evening star.
Some people would even call it a shooting star.
But in this case since there's two gaps it's technically an evening star.
You can see that we fell right to where support would be.
And then eventually broke down through it stop loss would go on the other side of the pattern like I
talked in this case you would take a break of the three candlestick pattern right there.
You had a pretty quick move about one and a half times your risk and then you eventually broke down
rather significantly.
These are generally only found on daily charts because of the gaps needed but unless of course you're
trading in a very illiquid stock in a short time frame then you can see these all over the place and
they don't mean as much.
You do need a liquid stock something in the trades decent volume both of these high end in Yum Brands
would certainly fall in that category.