Part VI. Triple candlestick patterns. Commander in Pips: As I promised, today we continue to talk about patterns. So let’s shift to the last part – patterns that consist of three candles. And the first pattern would be Morning Star/Evening Star. Pipruit: know – Morning star is a Morgenstern … Commander in Pips: Yes, definitely for the bears… Morning Star/Evening Star These patterns are reversal ones. Morning star forms on the bottoms, near some support level usually after some move down on the market. Evening star has the same properties but from opposite point of view – it forms on tops, near resistances, usually after some up move. As with previous lessons, we will talk in detail about the Evening Star. The Morning Star has absolutely the same properties but from bullish point of view. So, an Evening Star is a bearish reversal pattern, very often it appears at the end of a bullish trend. It assumes that after solid white candle follows a small candle, that could be white or black. The body of the second candle (small) should not cross the body of the first strong white candle. Also the small candle could be a small Doji. In this case this model is called “Evening Doji Star”. The third candle should be a solid black one. Its body also should not cross with the body of small second candle, but has to deeply penetrate the body of the first white candle (at least somewhere between 2/3 or 3/4 lower end of white candle). The consolidated candle of Evening star equals to Shooting star with small white body (try to build it by yourself – take the open of the first candle, high/low of a overall model and the close of the third candle – and you’ll see it). The market mechanics of this pattern is very clear. During the first white candle,the perspective of Buyers is clear and cloudless – no worries are visible. The second small candle shows that the market has fallen into indecision, because the bulls were not able to push the market higher, as usual. It shows that the number of buyers gradually became exhausted, or the number of sellers has become greater. When during the third candle price totally erases all bulls’ work during the previous two trading periods – in fact it turns into buyer capitulation. So, the same is true for Morning Star, but from the opposite point of view. Evening Star is treated as triggered pattern, when market closes below the low of the pattern. It treated as failed, if market will close above the high of the Evening Star.