Student’s Question:Can candlestick patterns be used as conformational indicators?Instructor’s Response:Sure…Take a look at the chart below…
We see a very well established trendline in place for about 4 months. A break of trendline support occurs when the bearish candle closes below the trendline. That in itself is significant. However, the pattern of which that candle is a part is an Evening Star. Since an Evening Star is interpreted as a bearish reversal signal, this would lend even more significance to the break of support.
