In this article, I will show you how to recognize an Evening Star candlestick pattern in Forex trading. Characteristics, meaning, and how to trade it the most effectively are also available.
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What is an Evening Star candlestick pattern?
The Evening Star is a Japanese candlestick pattern with the following characteristics:
– The first candle is a strong bullish green candle.
– A special candle with a small body (Doji or Spinning top) is the second candle of this pattern. Color does not matter.
–The last one is a bearish candle with a body that is at least 50% long of the first candle.
Meaning and where to appear
Combining the candles of an Evening Star candlestick pattern, we receive a Shooting Star candlestick pattern. This is a very accurate bearish signal. However, with a structure of 3 candles, Evening Star has a longer candle time period so it is more trusted by traders.
On the price chart, this pattern usually appears at the end of an uptrend. And it is a signal for the price decrease in the future. They represent a strong rejection by the sellers against the price increase.
In addition, the Evening Star can also appear when prices are in a downtrend. Then, it is a signal for the continuation of the downtrend.
Different variant Evening Star patterns
Below are other common variations of the Evening Star candlestick pattern. The biggest difference from the standard pattern is in the second candle.
+ When the second candlestick has a long upper tail, it shows the Bear’s dominant rejection against price rising. This is a variant of the Evening Star pattern that has relatively high accuracy.
+ When the second candlestick stays apart with 2 gaps, this is also known as the Abandoned Baby candlestick pattern which rarely appears but its accuracy is high.
How to trade & win Forex with Evening Star candlestick pattern
Evening Star is a reversal candlestick pattern that offers a very strong bearish signal. Below, I will guide you to open safe and effective Forex orders with it.
Notes: The Evening Star is a signal of a bearish market. So you can only open SELL orders. Absolutely do not open reverse (BUY) orders with Evening Star.
Strategy 1. Sell at the top
In many cases, every time the Evening Star pattern appears at the tops, the price will then plummet. Therefore, you can place a SELL order in this case.
Open an order as follows:
+ Entry Point: As soon as the price completes the Evening Star candlestick pattern.
+ Stop-Loss: At the highest price level before the price turns down.
+ Take-Profit: When the price touches old support levels that have been formed in the past.
Strategy 2. Trade following the trend with Evening Star
With this trading strategy, you need to have 2 signals to open an order. First, the price needs to be in a downtrend. And second, it is the Evening Star candlestick pattern.
Open an order as follows:
+ Entry Point: As soon as the price completes the Evening Star candlestick pattern.
+ Stop-Loss: At the nearest resistance formed.
+ Take-Profit: When the price touches old support levels that have been formed in the past.
For professional traders, when the Evening Star appears, they will wait for confirmation signals to decide whether to trade or not. So you can combine this signal with other indicators to increase your trading efficiency.
Get familiar with the Evening Star pattern today on a Demo account. This is a very reliable signal you need to master when trading Forex.
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The post Evening Star Candlestick Pattern And How To Trade Forex Most Effectively appeared first on How To Trade Blog.
source https://howtotradeblog.com/evening-star-candlestick-pattern-forex/
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