Candlestick Pattern :

• Evening Doji Star.
• Also known as the Bearish Abandoned Baby.

Description

• Widely regarded as one of the most common and effective patterns.
• It is a Top Reversal pattern depicted by 3 candlesticks.
• The 1 st candle is a long bullish candle that forms at the top of an up trend.
• The 2nd candle that forms is is a Doji that “gaps” upwards.
• The 3rd candle that forms “gaps” downwards into a long bearish candle that closes at least 50% or more into the 1st candle’s real body.

Trading Psychology :

• The Bulls are running the show with Price moving upwards indicating the continuation of the up trend shown by the 1st candle.
• As shown in the 2nd candle, a “gap” away from the upward move means that there is a sudden increase in conviction of the Bulls to push the price further up.
• However, the conviction suddenly stalls and reverses direction with the Bears making a challenge and ending the session with a draw or stalemate, signified by the doji.
  
• But the fact of the matter is that the Bears have already began to make their move to reverse the trend and momentum is on their side.
• The bearish 3rd candlestick clearly indicates that a reversal of sentimental in the opposite direction has taken place.
• And once the real body of the 3rd candle gradually extend downwards, beyond 50% of the 1st candlestick’s real body, the up trend is considered broken and the Bears have taken control.
• Price is on its way down.

My Thoughts :

• The Evening Doji Star candlestick is indeed one of the most accurate and reliable candlestick patterns around.
• In my opinion, it has a slight advantage over its sibling, the Evening Star candlestick pattern in terms of accuracy but unfortunately, it doesn’t occur as often,
• An important point to note is that in Forex Trading, since it is being traded 24 hours, “Gaps” between the closing price and opening price are very rare unlike other financial markets.
• That is why when identifying such patterns in FX trading, we can ignore the “Gap” portion of the candlestick pattern.
• Perhaps because of the “Lack Of Gaps” in Forex Trading, it is more commonly referred to as the Evening Doji Star rather than the Bearish Abandoned Baby.

However, don’t take all the signals that comes for granted, watch what price is doing first, Price Action precedes all indicators and patterns.

Have a safe and profitable trading day ahead.