| Candlestick
Three River Evening Pattern
 The
Three River Evening Star pattern formation occurs when
a white candle is followed by a gapping star (any color),
then followed by a black candle that is gapping below
the star candle. This pattern formation represents a
potential market top formation, and/or a sell signal.
This pattern formation is unique because it not only
identifies a potential market top, but it identifies
a resistance level. The resistance is found at, or near,
the high of the star candle.
The
Three River Evening Star pattern is somewhat rare and
can sometimes be found within a consolidating market.
When the Three River Evening Star pattern is found after
an extended bullish trend, it will often identify a
potential market top. When the Three River Evening Star
pattern is found within market consolidation, one should
not expect the market to form a top and immediately
sell-off. If the Three River Evening Star pattern is
found within market consolidation and the Doji Star
is well above the consolidation level, one should expect
the resistance level to hold and the market to eventually
sell-off.
This
pattern will also be precluded by a Doji Star pattern
formation. The Doji Star pattern will form prior to
the completion of the Three River Evening Star pattern.
Doji Star patterns are typically found at, or near,
market tops or bottoms. Although, sometimes a Doji Star
pattern can form within a trend as the market attempts
to break above or below a previous support or resistance
level.
The
story behind the Three River patterns is as follows:
In Japan, there were three rice farmers on three separate
rice farms, all separated by a river which joined between
their farms. One day, the farmers began fighting for
control of each others land to grow more rice. The battle
continued for many days until one farmer managed to
takeover one of the other farmers rice fields. The farmer
who gained control of two rice farms had the obvious
advantage and finally took over the last rice farm.
CONTINUE
| 
