Trading is based on the ability to read the market. One of the very valuable ways of interpreting the current conditions on the market is observing the candlesticks on the chart. During trading, you will come across plentiful candle patterns that you can utilize to determine exact points of trade entry and trade exit.
In this guide, I want to present you with the Evening Star Pattern which is widely used to identify the reversal of the trend. You will learn how to recognize the pattern and then how to use it on the Olymp Trade platform.
Recognizing the pattern of Evening Star
The Evening Star candlestick pattern includes three different candles. It is formed when the bearish trend reversal takes place.
The first candle is a long green one. It signifies the domination of the bulls on the market. Nevertheless, it is going to an end.
The second candle can be a small doji or spinning top. You will notice that its high is almost always higher than the peak of the last candle. But it only means that the trend is now exhausted and the bears take control over the prices.
The third candle in the pattern is a long red one. It only confirms the dominance of the bears. The trend has reversed.
Trading with the Evening Star pattern at Olymp Trade
You already know the Evening Star pattern means the end of the uptrend. What it further means is that you should definitely enter a sell trade. What is the best moment to do that?
Wait for the bearish candle to fully develop. The moment it closes you should enter the trade.
What should be the duration of your trade? Well, depending on the candle timeframe you will set a different duration. For instance, trading on 5-minute candles you may keep a position for 10 or 15 minutes. This will additionally protect you against small price movements often occurring in a shorter period of time.
The Evening Star pattern is a very nice and easy method of detecting the change in the trend. It will be always from a bullish trend to the bearish one so never place a buy order when you spot this pattern.
The only thing left is to practice trading with the Evening Star pattern. The Olymp Trade demo account is an excellent place to do that. Don’t hesitate and go trading.
Wish you success!
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