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formation forms at the end of an upward trend . The formation forms when the market trades at a fairly high level from the opening price during the trading session , but it closes relatively close to the lowest level for the day . The Shooting Star is represented graphically in Table1 . ix .
ii . Morning Star Regarded as one of the most significant candlestick formations , the Morning Star is formed by a combination of three candlestick charts at the end of a downward trend ( as represented graphically in Table 1 . x .). The first is a bearish candlestick , after which a Doji is formed , with a bullish candlestick completing the formation . This indicates the shift in the balance of powers from the buyers to the sellers , along with a possible trend reversal .
iii . Evening Star The Evening Star is the opposite of the Morning Star formation and is therefore also regarded as one of the more important candlestick formations . Similar to the Morning Star the Evening Star is formed by three candlesticks , namely a bullish candlestick , Doji , and lastly a bearish candlestick . The formation indicates a trend reversal if formed at the end of an upward trend . The Evening Star formation is illustrated graphically in Table 1 . xi .
f ) Dark Cloud Cover The Dark Cloud Cover candlestick formation forms in an upward trend with a bearish candlestick overshadowing the bullish candlestick of the previous trading
session , as represented graphically in Table 1 . xii . In this instance the formation indicates a strong trend reversal .
g ) Piercing Pattern The opposite of the Dark Cloud Cover is the Piercing Pattern , with the difference that a bullish candlestick overshadows the previous trading session ' s bearish candlestick . The candlestick formation forms in a downward market which indicates a possible strong trend reversal . The Piercing Pattern is represented graphically in Table 1 . xiii .
h ) Inside Candle The Inside Candle formation is formed by the previous trading session ' s candlestick which exceeds the current session ' s candlestick ( the high and low points of the first trading session exceed the high and low points of the second trading session ). The formation indicates indecision between buyers and sellers . The formation can be both positive and negative formations , depending on the direction of the current trend . A possible trend reversal is then indicated at the end of a strong trend . Table
1 . xiv . is a graphic illustration of the Inside Candle formation .
CONCLUSION By merely having a reasonable understanding of the above information , you will be a step ahead of the rest . However , it will be most beneficial to combine technical analysis with fundamental analysis in order to make the best possible decision . When the longer term support line is broken , it can usually be linked to fundamentally changing supply and demand factors .
Technical price graphs offer analysts the opportunity to visually represent the ratio between supply and demand and possible changes in this ratio can be indicated by various price formations . The next article will put more focus on the identification and analysis of different price formations .
For more information or to obtain competitive option prices on a variety of commodities please contact Susari Geldenhuys at 018 464 7430 or 072 116 9999 or e-mail her at Susari . Geldenhuys @ senwes . co . za .
SENWES Scenario • OCT / NOV 2016 41