Evening Star is a Three candlestick pattern indicates the reversal in trend. This is a Bearish reversal pattern appearing in the top of the Bullish trend. COAL INDIA stock witnessed this pattern on 29-Aug-2018.
The Conditions and qualifications of the Evening Star pattern:
1) The prior trend should be bullish. – Yes. It is witnessed from the chart.
2) The first candle is bullish and it is followed by an In-Decisive candle on the second day. – Yes. This is qualified.
3) The Third day’s candle should be in Red color, which should cross the half the way mark of the first day’s candle downwards. – Yes. This is also evident from the chart.
4) The pattern is more reliable if the second day’s candle is Gap up and the Third day’s candle is Gap down. – Yes. This is also qualified from the chart.
5) The volume on the second or third day should be higher. – Yes. The volume on the second day is higher.
The Trading Plan: SHORT
Entry Price: Rs.285.3 (Below the LOW of the third day)
Stoploss: Rs.299.75 (Highest HIGH of three days)
Target Price: Rs.270.85 (Considering the Risk to Reward of 1:1 Ratio)
Result of the trade: Target achieved in 12 days.
Hi,
Entry should be placed just below the lower tail of the Doji pattern
Dear Naresh,
Your point is noted. Thank you very much for your input.