I hope you will.
So now we're going to go through three candlestick patterns, which include star candlesticks, which
are candlesticks at the top or bottom of a trend.
So star patterns represent strong and valuable reversal warnings.
The formation of strong reversal patterns doesn't just keep you informed of a potential set up for entry
points, but these formations also indicate efficient profit-taking signals.
This is because if you're in a long position and you see a reversal pattern forming that indicates that
the price may make a U-turn to the downside soon.
Therefore, you should most likely grab your gains very quickly.
Using star candlestick formations will help increase your chances of getting out of a trade right at
the top.
So now looking at the diagram that we have right here, you can see that we've got four different star
patterns at the top.
We've got the evening star and the morning star and the bottom.
We've got the evening Doggystyle and the morning Doggystyle.
So for Candlestick to qualify as a star candlestick, the candlestick actually has to appear at the
top or bottom of an uptrend or downtrend and have a short body and the slight gap open higher in an
uptrend or lower in a downtrend from the previous candlestick.
So looking at this evening star candlestick pattern, for example, you can see that the previous candlestick,
this green one right here, closes right here with the mouses and the red one has a gap in between before
it opens.
The Red Star Candle has a gap between where this green candlestick closed and where the red one opened.
So this red candlestick is opening just the gap above the close of the green candlestick.
And on a downtrend, looking right here to the right hand side where my mouth is, that now you can
see that this dark candlestick, the previous candlestick is a red one right here on this downtrend.
And this dark candlestick has a gap before it opens after the close of this previous red candlestick.
So it's got a gap in between it and then it opens.
So this shows that this is a stark candlestick looking at the bottom right here.
The same applies in this uptrend.
You've got the green candlestick right here and the star candlestick opens with a gap in between the
previous candle and the star candlestick.
And the same applies at the bottom to the right on this downtrend.
The previous candlestick is this red one.
And the star candlestick that forms opens with the gap between the previous red candlestick and the
Green Star candlestick right here, which is a dodgy.
So now to talk about the co-stars.
When I say co-stars, I'm referring to the candlesticks before and after the actual star candlestick
at the top or bottom of on an uptrend or downtrend in the context of an uptrend.
The first body has to be long and green, like the one in this example this evening star pattern.
The first body is long and green, and then it's followed by the star appearing at the top right here
where my mouth is, and then a third candlestick, which has to be long and red, like the one right
here where my mouth is, which is the third candlestick.
And this candlestick has to be penetrating the green body of the first candlestick.
So this green one, you can see that this red candlestick penetrates into the price range of the green
body, which is the first one right here.
And in a downtrend, the contrary applies the first body, which is this red one right here, and this
example of the morning star, this red candlestick, the first candlestick in a downtrend.
The first body should be long and red, followed by the star appearing at the bottom right here where
my mouth is, and the third candlestick body moving up well into the first body of the red candle.
So this green candle means up penetrating into the price range of this red body right here.
So looking at these candlestick patterns for Evening Star and the Morning Star were both named by the
Japanese.
And when the star emerges as a dog, it's an even more powerful warning that a reversal may be coming.
So hence the names evening dog star and morning dog star as outlined in this example.
Right.
So what we're looking at the dog.
Let's check out some variations on this extremely powerful candlestick, a dog, such an extremely powerful
candlestick that maybe we should start calling it a dynamite stick instead of a candlestick.
Well, when you spot a dog and remember that it's most perfect place for forecasting a position is at
the top of an uptrend or a bottom of a downtrend.
You should consider the following points.
Point number one would be traditionally the dog opens and closes at the same price.
But if you spot a near dog where the prices are within a few digits of each other, it is still a significant
signal.
A dog that appears in a sideways move, complementing by other dogs and candlesticks with short bodies
are somewhat not as powerful of a signal of change.
Point number three, a dog can be viewed as more powerful at market tops rather than market buttons.
This holds true especially when the candlestick before the dog is a long green candle, such as the
one in the evening star pattern.
Think of it like this.
A long green body equals strong bullish opinion and then a dog developing after which equals indecision
by market players to pay a higher price.
Well, what will this most likely result in?
I think a possible pullback or profit taking may soon follow.
This is what these dogs are.
Candlestick patterns represent point number four, a dog that confirms a trend, top or bottom will
turn into support or resistance areas in many occasions.
Point number five, when an asset in an uptrend pulls back to support and then forms a dog that indicates
that the market may be ready to turn and resume its uptrend.
The same applies for an asset in a downtrend.
If the price rebounds back to the resistance, followed by the formation of a dog, the chances are
high that the price may drop back to the downside.
So therefore it is important to note that these formations only signal probabilities.
Hence why I say that the price may be the key word here is may, may drop or may resume its.
Uptrend always wait for the next candle to confirm price direction, and that's it for this lesson.
Thanks for watching.