‫This video how to trade morning and 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 in this example.
‫And this would definitely be bearish.
‫This is what is known as an evening star.
‫It's 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.
‫A morning star of course, would be the exact opposite.
‫And you can see that you would have a negative candlestick here, a candlestick here that 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.
‫Well, 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 it gaps 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 based
‫upon a break of the three bar pattern itself.
‫So the longest candlestick in this case it would actually be underneath here.
‫You would start shorting.
‫Causes is 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.
‫That's bullish.
‫You can see that we drop.
‫And then this day things drop a little further.
‫Then 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 gap higher.
‫We break above the top of the candlestick pattern, the three candlestick pattern, stoploss 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 gapped higher.
‫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 in 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 had 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 one 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 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 that trades decent volume.
‫Both of these high end in yum brands would certainly fall in that category.