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Morning and Evening Star & Engulfing


Morning Star Candlestick

Morning Star Candlestick Chart

Morning Star Candlestick


Technical Analysis of Morning Star Pattern

Morning star is a three day bullish reversal pattern.

 

The first day is a long black candlestick.

 

The second day is a morning star that gaps away from the long black candlestick.

 

Third day is a long white candlestick that fills the gap.

 

The filling of the gap and closing of the white candlestick above the gap is a strong bullish Forex signal.

 

Traders should open a buy trade after market price closes above the gap formation of the morning star. This is the confirmation signal of a buy signal generated by this pattern.

 

 

Evening Star Candlestick

Opposite of the morning star

Evening Star Candlestick chart pattern

Evening Star Candlestick

 

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Technical Analysis of Evening Star Candlestick Pattern

 

Evening star is a three day bearish reversal pattern.

 

The first day is a long white candlestick.

 

The second day is the evening star that gaps away from the long white candle.

 

Third day is a long black candlestick that fills the gap.

 

The filling of the gap and closing of the black candlestick below the gap is a strong bearish Forex signal.

 

Traders should open a sell trade once the market closes below the gap formation of the evening star. This is the confirmation signal of a sell signal generated by this pattern.

 

 

Engulfing Pattern

Engulfing is a reversal candlestick pattern that can be bearish or bullish depending upon whether it appears at the end of a market downtrend or at the end of a market uptrend.

Engulfing Candlestick Pattern on Forex chart

Bullish and Bearish Engulfing Pattern

 

Technical Analysis of Bullish and Bearish Engulfing Patterns

The color of the first candlestick indicates the trend of the day.

 

The second candlestick should completely engulf the first candlestick and it should have the opposite color.

 

For Bullish Engulfing the color of the candlestick should be Blue

 

For Bearish Engulfing the color of the candlestick should be Red

Market Sentiment: Did you know that traders and market participants have been buying US Dollars because USD is the best currency to hold when there is a recession – this is because the dollar is held as the reserve currency by most central banks and during recession most traders also prefer to hold this currency, this is why USD is known as a safe haven currency. But now the market sentiment has changed and all the economies are on their way to recovery and most have even returned to economic growth based on the economic reports coming from these countries.

During times of economic growth traders prefer to sell the dollars they had bought and start buying higher yielding currencies. These higher yielding currencies include EURO and Great Britain Pound. This is why the Euro is starting to appreciate against the USD. The EURUSD is trending upwards; Crude Oil Prices have also started to move back up because demand of oil is growing because of the global economic growth, Gold is also in an upward trend because during economic growth the prices of commodities also go up because there is increase in their demand.

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