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Friday, July 10, 2009

Post of the Day: Evening Star

Student’s Question:

Can candlestick patterns be used as conformational indicators?

Power Course Instructor’s Response:

Sure…

Take a look at the chart below…


chart 7 09 09


We see a very well established trendline in place for about 4 months. A break of trendline support occurs when the bearish candle closes below the trendline. That in itself is significant. However, the pattern of which that candle is a part is an Evening Star. Since an Evening Star is a bearish signal, this would lend even more significance to the break of support.

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