MORNING STAR vs. EVENING STAR

Both Morning Star & Evening Star are 3-day reversal patterns.Whether a pattern is bearish or bullish reversal, it depends upon whether it appears at the end of a downtrend (Morning Star) or an uptrend (Evening Star).Note:The grey candle means the color of the candle�s body can be white or black (red).MORNING STAR (BULLISH)Morning Star is a bottom reversal pattern / bullish reversal pattern.It may be formed at the end of a downtrend, or during a pullback within an uptrend, or at the support.Morning Star pattern consists of 3 candlesticks:1) A long-body black/red candle, extending the existing downtrend.2) A small candle that gapped down on...

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DESCENDING CHANNEL PATTERN

Descending Channel Pattern is a short-term bearish continuation pattern, whereby the price movement is contained within two parallel descending trend lines and the price is moving lower while bouncing off upper and lower down-trending lines.Descending Channel pattern is also known as �Bearish Price Channel�.The Formation of Descending Channel PatternDescending Channel Pattern has two parallel trend lines that are sloping downward.In this case, the descending upper line acts as resistance, while the descending lower line as support.In general, Price Channel pattern has Main Trend Line (or Primary Trend Line) and Channel Line (or Secondary Trend...

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ASCENDING CHANNEL PATTERN

Ascending Channel Pattern is a short-term bullish continuation pattern, whereby the price movement is contained within two parallel ascending trend lines and the price is moving higher while bouncing off upper and lower up-trending lines.Ascending Channel pattern is also known as �Bullish Price Channel� or �Rising Channel�.The Formation of Ascending Channel PatternAscending Channel Pattern has two parallel trend lines that are sloping upward.In this case, the ascending lower line acts as support, whereas the ascending upper line as resistance.In general, Price Channel pattern has Main Trend Line (or Primary Trend Line) and Channel Line (or Secondary...

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Love Links

Happy Valentine�s Day to all my readers!May you have a specially sweet and memorable day today by spending it with your loved ones. :)By the way, it�s been quite a while I didn�t provide links to many excellent educational readings out there.Here are some of them. Check them out!Trading Wise Words: What Is Discipline in Trading?OptionAddict: Selecting an Option... With a Hint of GammaAfraid To Trade: Insights from Volume and Open InterestAfraid To Trade: Thoughts on Frustration in Achieving Trading SuccessTime Is Money: The Holy Grail Setup ExplainedA Trade A Day: Flag PatternChris Perruna: Trading Mistakes: Avoid at all Costs Thomas N. Bullowski in SmartMoney: Lessons Learned After 25 Years of TradingTraderFeed: The Best of TraderFeed: Resources for Becoming Your Own Trading Co...

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RECTANGLE PATTERN � Part 2: Important Characteristics

Go back to Part 1: Rectangle FormationImportant Characteristics of Rectangle Pattern:Existing Trend:There should be an established existing trend (either uptrend or downtrend) in order for the pattern to qualify as a continuation pattern.Shape of Rectangle Pattern:* There should be at least 4 reversal points to draw two parallel lines, i.e. two equivalent peak (high) points forming a horizontal upper line (resistance) and two equivalent trough (low) points forming a horizontal lower line (support).* There should be some distance between the two peaks as well as the two troughsIn other words, prices should increase and hit the horizontal upper line then decline for at least twice (forming at least two peaks). Prices should drop and hit the horizontal lower line then bounce up for at least twice...

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RECTANGLE PATTERN � Part 1: Formation

Rectangle Pattern is a neutral pattern that normally forms during a trend (either uptrend or downtrend) as a continuation / consolidation pattern.The breakout usually occurs in the same direction as the previous trend, although it may break against the previous trend as well.Rectangle pattern is also known as �trading range�, �box pattern�, "rectangular pattern�, �consolidation zones�, or �congestion areas�.The Formation of Rectangle PatternRectangle Pattern contains at least two equal highs (peaks) and two equal lows (troughs). When the peak as well as trough points are connected by separate lines, they would form two parallel, horizontal lines...

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