That too, was an Evening Star. To catch part of it, you would have to have been watching real-time, suspecting an Evening Star was forming and got on it early at around 1.268. Stars and engulfers indicate a possible top/bottom has just been completed. I know of no candle patterns which would anticipate a turn.
Thanks Pete! "bearish engulfing" ... I'll study that formation. Also, you gave me an idea! I will study all "short" or "bearish" formations! That is how I can get a jump on these thingys. ol
Luto: Interesting observation! A run up, then a pause. To me that may indicate a couple things: either a pause in the run up then a continuation... or, that longs ran out of steam, then a decline (such as the one that happened)... or, that a coordinated effort by sellers happened to kick in after the pause for some reason. Who is to know for sure, though, unless this pattern is most the time associated with a decline. I have not been studying/trading long enough to know. Any suggestions? Do spinning stars always indicate a pause?
Gnome: Is there a common separation between these indicators/formations, and a STRONG version of them that may indicate a powerful approaching decline? ol
One very important point as you learn about candlesticks: these two or three candlestick formations have to be taken in context. For example, I have found that a bearish engulfing at a previous failure is a WHOLE lot more realiable entry signal than just a bearish engulfing in any old place. Another thing, which I even know less about, is what is supposed to happen AFTER your candle signal. But this just falls into the category of "study the winners", learn how they behave before and after entry.
So be sure to include the context in your studies. One way to do this is to look at a longer term chart, and see what's happening there when you get your successful signals. Or, the other way around if you are already looking at a slower chart: look at a faster chart around where you got successful signals and see what was going on there.
Right, wise advice, at best any "indicators" are to only be used as minor confirmations to the overall structure of a trade and not *relied* upon for trading plans/decisions. I'm going to be reading your journal too. ol