How To Trade Forex With Morning and Evening Stars (2)
After reading the introduction to the pattern of stars in the previous article, we continue with how to trade with morning star pattern or evening star pattern. Particularly to keep in mind this is to identify the end of a trend or trend reversal.
The stars pattern consists of three candles, where the first candle is a strong candle in the direction of trend before reversal. The candle has a long bullish body (in evening pattern) or long bearsih body (in morning pattern) and very short shadow.
The second candle (in the middle) can be a hammer or doji pattern. Both show reversal conditions or at least show a trending indecision.
The third (final) candle moves in the opposite direction of the previous trend and has a long body, like the first candle.
See the picture in article 1, a morning star pattern like all the prerequisites described above. The initial trend is bearish and at the tip of the trend comes the morning star pattern. The market will react to bullish reversal and its strength or target is adjusted to the timeframe of its occurrence. In this 2nd article, is a picture for the evening star pattern.
Usually a trader will search for retrace motion up to 50% of the pattern to place the buy or sell position (depending on the pattern that appears). To be able to place trading position, trader must use RRR according to requirement. Because even though this pattern appears and has a normal impact, traders should be wary if prices do not go as planned.
The Japanese candle technique is a good reversal pattern to detect. Often proved to be true and usually good when it comes up on a big timeframe like H4, D1 or above.
Although a trader is able to identify but do not forget to integrate it with a good money management system as well. Because this is one of the keys to successful traders when trading forex.