There are several chart types available on the Binomo platform. One of them is Japanese candlesticks. The candles form different patterns and the latter is used in technical analysis. By observing candlestick patterns, you get the entry points for your trades even without applying any indicators. Today, I will describe one such pattern for you. It is called the Evening Star and it helps to predict a reversal in the trend.
Identifying the Evening Star on the Binomo platform
There are 3 candles in the Evening Star candle pattern. It develops on the top of the uptrend and announces the change in the direction of the trend.
A bullish candle begins the formation. It is a long candle which represents the domination of the bulls in the market.
The following candle is a doji or spinning top. It has a small body and usually, its opening price is located higher than the closing price of the former green candle. It shows that the bears are fighting against the bulls.
The last candle in the formation is a long red candlestick. The bears took control over the market and the trend has converted.
Using the Evening Star pattern in trading on the Binomo platform
We have already established that the Evening Star is a bearish reversal pattern. This means it is formed at the top of the uptrend. So, when you spot it you should enter a short trade. Now, let’s see which moment is best to enter the market.
Observe the candles. Wait for the full development of the first red candle. Enter at the moment it closes.
The duration of your transaction is strictly connected to the candlesticks period. I suggest you set at least a 5-minute time frame for your chart because the price movements on the shorter intervals are too often and difficult to analyse. If you decide on a 5-minute chart, you can keep the position open for around 10-15 minutes.
Trading with the Evening Star is not complicated. It is a bearish reversal pattern so you know the downtrend is imminent. Thus, you have to open a sell position with it.
Your task is to identify the pattern and wait for the bearish candle to form completely. Then, you open the trade.
Binomo offers a demo account. You should use it to practise recognising and using the Evening Star candle pattern. Once you get hold of it, move to the real account.
Best of luck!