Dow

The Dow formed a rare but not yet recognised Evening Doji Star. A candlestick pattern associated with market peaks and is rare. The amazing thing is that this one is small in size and therefore went unrecognised by Metastocks automated candlestick feature. But to my eyes it looks apt. The pattern involves a big candle up then a doji and a candle down. The next important thing is that the doji has a read body that does not touch the real body of the candles before and after it. The real body is the big fat part of any candle that is drawn from the open to close. The line above and below it is the high and low. So in this case the real body has gaps on both sides and that is an important requirement of a evening or morning star pattern. So as long as we are below the recent highs the trend should be down based on this. If you have read Candlesticks by Steve Nison one method of verification is that when you add the three candles together you get an inverted hammer. This is true here as the open and low were same on the first day and we closed significantly lower on the third day so it does form an inverted hammer.