1 00:00:07,040 --> 00:00:08,180 I hope you will. 2 00:00:08,240 --> 00:00:14,060 So now we're going to go through three candlestick patterns, which include star candlesticks, which 3 00:00:14,060 --> 00:00:17,000 are candlesticks at the top or bottom of a trend. 4 00:00:17,300 --> 00:00:22,730 So star patterns represent strong and valuable reversal warnings. 5 00:00:23,060 --> 00:00:29,990 The formation of strong reversal patterns doesn't just keep you informed of a potential set up for entry 6 00:00:29,990 --> 00:00:35,240 points, but these formations also indicate efficient profit-taking signals. 7 00:00:35,270 --> 00:00:41,270 This is because if you're in a long position and you see a reversal pattern forming that indicates that 8 00:00:41,270 --> 00:00:44,100 the price may make a U-turn to the downside soon. 9 00:00:44,300 --> 00:00:48,410 Therefore, you should most likely grab your gains very quickly. 10 00:00:48,650 --> 00:00:55,130 Using star candlestick formations will help increase your chances of getting out of a trade right at 11 00:00:55,130 --> 00:00:55,790 the top. 12 00:00:55,820 --> 00:01:01,970 So now looking at the diagram that we have right here, you can see that we've got four different star 13 00:01:02,000 --> 00:01:03,520 patterns at the top. 14 00:01:03,530 --> 00:01:06,830 We've got the evening star and the morning star and the bottom. 15 00:01:06,830 --> 00:01:10,530 We've got the evening Doggystyle and the morning Doggystyle. 16 00:01:10,550 --> 00:01:17,480 So for Candlestick to qualify as a star candlestick, the candlestick actually has to appear at the 17 00:01:17,480 --> 00:01:25,490 top or bottom of an uptrend or downtrend and have a short body and the slight gap open higher in an 18 00:01:25,490 --> 00:01:29,780 uptrend or lower in a downtrend from the previous candlestick. 19 00:01:29,990 --> 00:01:36,230 So looking at this evening star candlestick pattern, for example, you can see that the previous candlestick, 20 00:01:36,230 --> 00:01:44,180 this green one right here, closes right here with the mouses and the red one has a gap in between before 21 00:01:44,180 --> 00:01:45,020 it opens. 22 00:01:45,020 --> 00:01:52,800 The Red Star Candle has a gap between where this green candlestick closed and where the red one opened. 23 00:01:52,820 --> 00:01:59,330 So this red candlestick is opening just the gap above the close of the green candlestick. 24 00:02:00,310 --> 00:02:06,460 And on a downtrend, looking right here to the right hand side where my mouth is, that now you can 25 00:02:06,460 --> 00:02:13,480 see that this dark candlestick, the previous candlestick is a red one right here on this downtrend. 26 00:02:13,660 --> 00:02:21,600 And this dark candlestick has a gap before it opens after the close of this previous red candlestick. 27 00:02:21,610 --> 00:02:24,590 So it's got a gap in between it and then it opens. 28 00:02:24,610 --> 00:02:29,530 So this shows that this is a stark candlestick looking at the bottom right here. 29 00:02:29,560 --> 00:02:31,510 The same applies in this uptrend. 30 00:02:31,520 --> 00:02:37,750 You've got the green candlestick right here and the star candlestick opens with a gap in between the 31 00:02:37,750 --> 00:02:40,510 previous candle and the star candlestick. 32 00:02:40,510 --> 00:02:44,620 And the same applies at the bottom to the right on this downtrend. 33 00:02:44,620 --> 00:02:47,020 The previous candlestick is this red one. 34 00:02:47,020 --> 00:02:53,590 And the star candlestick that forms opens with the gap between the previous red candlestick and the 35 00:02:53,590 --> 00:02:57,000 Green Star candlestick right here, which is a dodgy. 36 00:02:57,190 --> 00:02:59,500 So now to talk about the co-stars. 37 00:02:59,500 --> 00:03:06,220 When I say co-stars, I'm referring to the candlesticks before and after the actual star candlestick 38 00:03:06,220 --> 00:03:11,350 at the top or bottom of on an uptrend or downtrend in the context of an uptrend. 39 00:03:11,350 --> 00:03:17,560 The first body has to be long and green, like the one in this example this evening star pattern. 40 00:03:17,560 --> 00:03:25,510 The first body is long and green, and then it's followed by the star appearing at the top right here 41 00:03:25,510 --> 00:03:32,170 where my mouth is, and then a third candlestick, which has to be long and red, like the one right 42 00:03:32,170 --> 00:03:34,780 here where my mouth is, which is the third candlestick. 43 00:03:34,780 --> 00:03:40,630 And this candlestick has to be penetrating the green body of the first candlestick. 44 00:03:40,630 --> 00:03:47,170 So this green one, you can see that this red candlestick penetrates into the price range of the green 45 00:03:47,170 --> 00:03:49,570 body, which is the first one right here. 46 00:03:49,570 --> 00:03:55,540 And in a downtrend, the contrary applies the first body, which is this red one right here, and this 47 00:03:55,540 --> 00:04:01,210 example of the morning star, this red candlestick, the first candlestick in a downtrend. 48 00:04:01,450 --> 00:04:07,660 The first body should be long and red, followed by the star appearing at the bottom right here where 49 00:04:07,660 --> 00:04:14,890 my mouth is, and the third candlestick body moving up well into the first body of the red candle. 50 00:04:14,890 --> 00:04:21,380 So this green candle means up penetrating into the price range of this red body right here. 51 00:04:21,430 --> 00:04:27,190 So looking at these candlestick patterns for Evening Star and the Morning Star were both named by the 52 00:04:27,190 --> 00:04:27,910 Japanese. 53 00:04:27,910 --> 00:04:34,510 And when the star emerges as a dog, it's an even more powerful warning that a reversal may be coming. 54 00:04:34,510 --> 00:04:41,810 So hence the names evening dog star and morning dog star as outlined in this example. 55 00:04:41,830 --> 00:04:42,120 Right. 56 00:04:42,170 --> 00:04:44,080 So what we're looking at the dog. 57 00:04:44,200 --> 00:04:51,670 Let's check out some variations on this extremely powerful candlestick, a dog, such an extremely powerful 58 00:04:51,670 --> 00:04:56,590 candlestick that maybe we should start calling it a dynamite stick instead of a candlestick. 59 00:04:56,620 --> 00:05:03,430 Well, when you spot a dog and remember that it's most perfect place for forecasting a position is at 60 00:05:03,430 --> 00:05:06,610 the top of an uptrend or a bottom of a downtrend. 61 00:05:06,790 --> 00:05:08,860 You should consider the following points. 62 00:05:08,860 --> 00:05:14,950 Point number one would be traditionally the dog opens and closes at the same price. 63 00:05:14,950 --> 00:05:22,120 But if you spot a near dog where the prices are within a few digits of each other, it is still a significant 64 00:05:22,120 --> 00:05:22,660 signal. 65 00:05:22,660 --> 00:05:29,890 A dog that appears in a sideways move, complementing by other dogs and candlesticks with short bodies 66 00:05:30,100 --> 00:05:33,460 are somewhat not as powerful of a signal of change. 67 00:05:33,460 --> 00:05:40,360 Point number three, a dog can be viewed as more powerful at market tops rather than market buttons. 68 00:05:40,390 --> 00:05:46,840 This holds true especially when the candlestick before the dog is a long green candle, such as the 69 00:05:46,840 --> 00:05:48,740 one in the evening star pattern. 70 00:05:48,760 --> 00:05:49,840 Think of it like this. 71 00:05:49,840 --> 00:05:57,790 A long green body equals strong bullish opinion and then a dog developing after which equals indecision 72 00:05:57,790 --> 00:06:00,790 by market players to pay a higher price. 73 00:06:00,790 --> 00:06:04,030 Well, what will this most likely result in? 74 00:06:04,720 --> 00:06:09,480 I think a possible pullback or profit taking may soon follow. 75 00:06:09,940 --> 00:06:12,710 This is what these dogs are. 76 00:06:12,730 --> 00:06:19,390 Candlestick patterns represent point number four, a dog that confirms a trend, top or bottom will 77 00:06:19,390 --> 00:06:22,990 turn into support or resistance areas in many occasions. 78 00:06:22,990 --> 00:06:29,530 Point number five, when an asset in an uptrend pulls back to support and then forms a dog that indicates 79 00:06:29,530 --> 00:06:33,280 that the market may be ready to turn and resume its uptrend. 80 00:06:33,280 --> 00:06:36,100 The same applies for an asset in a downtrend. 81 00:06:36,100 --> 00:06:42,970 If the price rebounds back to the resistance, followed by the formation of a dog, the chances are 82 00:06:42,970 --> 00:06:46,360 high that the price may drop back to the downside. 83 00:06:46,360 --> 00:06:52,240 So therefore it is important to note that these formations only signal probabilities. 84 00:06:52,240 --> 00:06:59,740 Hence why I say that the price may be the key word here is may, may drop or may resume its. 85 00:06:59,870 --> 00:07:06,330 Uptrend always wait for the next candle to confirm price direction, and that's it for this lesson. 86 00:07:06,440 --> 00:07:07,430 Thanks for watching.