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.