1
00:00:02,630 --> 00:00:06,350
‫This video how to trade morning and evening star patterns.

2
00:00:06,350 --> 00:00:09,020
‫So these are three candlestick patterns.

3
00:00:09,020 --> 00:00:16,250
‫And essentially what you have is a situation where you get a couple of gaps.

4
00:00:16,250 --> 00:00:22,280
‫So three days for example where you get long candlestick.

5
00:00:22,310 --> 00:00:23,270
‫This would be bullish.

6
00:00:23,270 --> 00:00:27,140
‫This could be bullish or bearish in this example.

7
00:00:27,140 --> 00:00:30,140
‫And this would definitely be bearish.

8
00:00:30,590 --> 00:00:35,210
‫This is what is known as an evening star.

9
00:00:35,210 --> 00:00:35,750
‫It's out.

10
00:00:35,750 --> 00:00:38,780
‫It's nighttime shows negativity.

11
00:00:38,780 --> 00:00:42,110
‫But you have the gap there and the gap there.

12
00:00:42,140 --> 00:00:44,000
‫The wicks can cross each other.

13
00:00:44,000 --> 00:00:47,130
‫It's just a matter of the gaps being there now.

14
00:00:47,130 --> 00:00:50,210
‫A morning star of course, would be the exact opposite.

15
00:00:51,790 --> 00:00:57,880
‫And you can see that you would have a negative candlestick here, a candlestick here that could be positive

16
00:00:57,880 --> 00:00:58,420
‫or negative.

17
00:00:58,450 --> 00:00:59,170
‫That's the thing.

18
00:00:59,170 --> 00:01:05,020
‫The star itself doesn't really matter other than it's very small compared to the other candlesticks.

19
00:01:06,120 --> 00:01:08,970
‫Or it shows a lack of momentum, I should say.

20
00:01:10,070 --> 00:01:13,340
‫And then you have a gap above.

21
00:01:14,520 --> 00:01:15,880
‫And it shows a reversal.

22
00:01:15,900 --> 00:01:20,790
‫Now these candlestick patterns, you have to think about what they show.

23
00:01:20,790 --> 00:01:25,980
‫Well, they they show here in this one we're in an uptrend.

24
00:01:26,010 --> 00:01:29,550
‫So we're going higher for a while.

25
00:01:29,550 --> 00:01:33,000
‫And on this day we get a bit of a move and then we gap higher.

26
00:01:33,000 --> 00:01:36,390
‫And that should be a continuation of the trend.

27
00:01:36,390 --> 00:01:39,480
‫But things don't really take off that day.

28
00:01:39,480 --> 00:01:41,400
‫And then the next day it gaps down.

29
00:01:41,400 --> 00:01:44,010
‫Well that's a sign that things could be changing.

30
00:01:44,950 --> 00:01:46,610
‫It's a very bearish signal.

31
00:01:46,630 --> 00:01:51,790
‫You simply put your stop loss on the other side of the three bar pattern, and you take a short based

32
00:01:51,790 --> 00:01:55,690
‫upon a break of the three bar pattern itself.

33
00:01:55,690 --> 00:01:59,020
‫So the longest candlestick in this case it would actually be underneath here.

34
00:01:59,470 --> 00:02:00,970
‫You would start shorting.

35
00:02:02,280 --> 00:02:08,520
‫Causes is a little bit wider stops at times, but it's generally thought that you should get a bigger

36
00:02:08,520 --> 00:02:09,010
‫move.

37
00:02:09,030 --> 00:02:10,590
‫Now here in this one.

38
00:02:11,240 --> 00:02:12,510
‫The morning star.

39
00:02:12,530 --> 00:02:14,000
‫The star is going to rise.

40
00:02:14,030 --> 00:02:14,930
‫That's bullish.

41
00:02:15,440 --> 00:02:17,210
‫You can see that we drop.

42
00:02:17,300 --> 00:02:20,090
‫And then this day things drop a little further.

43
00:02:20,090 --> 00:02:24,680
‫Then we get a little bit of a gap lower, which should be a continuation, but the market really doesn't

44
00:02:24,680 --> 00:02:25,760
‫move that day.

45
00:02:25,790 --> 00:02:27,890
‫Then the third day we gap higher.

46
00:02:28,370 --> 00:02:32,750
‫We break above the top of the candlestick pattern, the three candlestick pattern, stoploss underneath

47
00:02:32,750 --> 00:02:36,680
‫it, and you swing for a trend change.

48
00:02:37,720 --> 00:02:41,130
‫So here is an example of a morning star.

49
00:02:41,140 --> 00:02:44,170
‫You can see that this candlestick was negative.

50
00:02:44,170 --> 00:02:44,950
‫We closed up here.

51
00:02:44,950 --> 00:02:49,090
‫We gapped lower but we had a pretty tight range here and then gapped higher.

52
00:02:49,120 --> 00:02:54,700
‫You can see that was in fact beginning of a pretty significant move based upon the Morning Star.

53
00:02:54,850 --> 00:03:00,970
‫You know your first target would have been the next resistance level very easily made this resistance

54
00:03:00,970 --> 00:03:03,780
‫level and then this resistance level.

55
00:03:03,790 --> 00:03:06,190
‫So certainly you hit all of your targets.

56
00:03:07,020 --> 00:03:08,250
‫Over here in yum brands.

57
00:03:08,250 --> 00:03:13,110
‫We have a evening star because we have a long candlestick here.

58
00:03:13,670 --> 00:03:14,870
‫At the top of a trend.

59
00:03:14,900 --> 00:03:19,600
‫We have a neutral candlestick after the gap and then we have a gap lower.

60
00:03:19,610 --> 00:03:23,480
‫So that is an evening star.

61
00:03:23,510 --> 00:03:26,590
‫Some people would even call it a shooting star.

62
00:03:26,600 --> 00:03:30,740
‫But in this case, since there's two gaps, it's technically an evening star.

63
00:03:30,770 --> 00:03:35,210
‫You can see that we fell right to where support would be and then eventually broke down through it.

64
00:03:36,480 --> 00:03:39,540
‫Stop loss would go on the other side of the pattern like I had talked.

65
00:03:39,540 --> 00:03:44,010
‫In this case, you would take a break of the three candlestick pattern right there.

66
00:03:44,040 --> 00:03:49,680
‫You had a pretty quick move about one and one half times your risk, and then you eventually broke down

67
00:03:49,680 --> 00:03:51,030
‫rather significantly.

68
00:03:51,150 --> 00:03:55,590
‫These are generally only found on daily charts because of the gaps needed.

69
00:03:55,890 --> 00:04:01,950
‫But unless of course, you're trading a very illiquid stock in a short time frame, then you can see

70
00:04:01,950 --> 00:04:04,620
‫these all over the place and they don't mean as much.

71
00:04:04,650 --> 00:04:09,870
‫You do need a liquid stock, something that trades decent volume.

72
00:04:10,140 --> 00:04:14,880
‫Both of these high end in yum brands would certainly fall in that category.