An Evening Star Pattern represents a set of three major candlesticks. These are considered by many online traders as a topping signal that means it is now time to cash out before the stocks they hold start to plummet on the price chart.
Candlestick charts are simply terrific tools for online trading because they can offer you so much information that you will not be able to form a basic line chart.
Each candlestick shares four different pieces of information with you, the opening price of a trend, the closing price of the trend, the highest point or peak of the trading session and the lowest dip of the trading session. You can always learn about this pattern in detail through various reliable sources such as Global CTB.
White and green candles represent the overall hike in the price, whereas red or black candles show the overall decline of the trend. In case of a trend closes lower than the price it opened at, the candle on the chart will appear either black or red. If the trend closes higher than its initiated price, the candles will be white or green
The larger the height on the candle, the greater was the trading range during that day or time period. However, an evening star pattern is not a common thing; therefore, if you see it appear, you should proceed with caution and appropriate concerns.
You must also remember that appearance of a single evening start pattern is not a sign or an indicator that you slam dunk sell or buy. Always confirm all the technical aspects and patterns within the current trend before using a pattern as a trading signal.
How It Works?
An evening star pattern comes with a time frame for each of the three candle periods. Each of them is measures individually, and on your daily trading chart, it would need three days of individual price action.
Whenever the evening star pattern starts to take shape, traders often observe their trade charts and start selling the stock or short it. This pattern also starts to materialize when the stock prices begin constricting near the end of its bull run. The evening star pattern is represented as a large green candle on the chart, and it indicates the continuation of the trend. This is then followed by smaller green or red candle sitting right above the initial candle.
The third candle actually is a larger one than the first two, and it is a red candle. However, this evening start pattern will not appear out of the blue. It always appears while there is an uptrend happening in the trend’s price action.
Trading this pattern takes a lot of intuition and practice from an online trader. Just because you can see an evening start pattern does not mean that it is a signal to go ahead and indulge in trading, buying, or selling.
Try to understand the circumstances and conditions before you start looking for an evening start pattern. Learn why it appears and where it is most likely to appear. Always stay up to date with new tips and tricks and new trends through online trading portals such as Global CTB.
Conclusion
Like any trading signal, this pattern must also be used along with other technical trading tools to maximize your profitability. However, one of the things to remember is that this pattern is both powerful and rare, and it does not guarantee to be 100 percent accurate. So tread with precaution, check for other signals as well before jumping to any conclusions, and making a move.