In the last lesson, we discussed bullish K-line combinations. In this lesson, we will talk about three types of bearish K-line combinations: evening star, bearish engulfing, and tower top.

1. Bearish K-line combination - Evening star

What kind of K line combination is an evening star? As indicated in the red line area in the figure.

The standard evening star consists of three K lines: first, a larger bullish candlestick, followed by a candlestick resembling a 'doji', and the third K line is a larger bearish candlestick. The validity of the evening star has specific requirements for the length of the third bearish candlestick; its closing price must be below 50% of the first bullish candlestick entity.

After confirming the evening star is valid, we can determine the strength of the bearish pressure based on the position of the closing price of the last bearish candlestick. As shown in the example, if the closing price of the bearish candlestick just exceeds the 50% threshold, the bearish strength is relatively weak. If the closing price of the subsequent bearish candlestick is on par with the opening price of the previous bullish candlestick, it is considered strong bearish strength. If the closing price of the subsequent bearish candlestick is significantly lower than the opening price of the previous bullish candlestick, it is considered quite strong bearish strength.

What was just discussed is the most standard evening star pattern, but in actual market movements, the evening star can have some variations. So what does a real evening star look like in the market?

Three types of evening stars.

Figure 1, composed of two small K lines in the middle. We will restore it to the actual price chart. After a significant rise in price, a evening star appears in the high price area, leading to a substantial price adjustment.

Figure 2, the middle K line is not a standard doji but rather a small K line with a long upper shadow. The screenshot is from the BTC/USD 2-hour chart, where after the evening star appears at a high point, the price stagnates and falls back.

Figure 3, two doji candlesticks appear in the middle, and the bearish strength is significantly greater than the bullish strength. After a significant rise in price, a strong evening star appears, followed by a final decline after oscillating at a high level. Sometimes, the evening star can appear consecutively multiple times. During the decline in BTC/USDT, two rebound peaks that were not far apart both showed evening stars, and the price continued to decline thereafter.

2. Bearish K-line combination - Bearish engulfing.

First, let's look at the characteristics of the bearish engulfing. The following bearish candlestick entity completely covers the previous bullish candlestick entity, as if the bullish candlestick is being swallowed by the bearish candlestick. This indicates a strong counterattack from the bears, hence the name bearish engulfing.

So how do we judge the bearish strength?

Figure 1, the bearish candlestick entity just completely engulfs the bullish candlestick entity, which indicates a relatively weak bearish strength; Figure 2, the closing price of the bearish candlestick entity is significantly lower than the opening price of the bullish candlestick, and the length of the bearish candlestick even reaches twice that of the bullish candlestick, indicating strong bearish strength; Figure 3, the bearish candlestick entity completely engulfs multiple bullish candlesticks, indicating very strong bearish strength.

There are many non-standard bearish engulfing patterns in the market, so what does the actual bearish engulfing pattern look like?

For example, the three types of bearish engulfing patterns shown in the figure.

Figure 1 (screenshot from LTC/USDT daily chart), after a significant rise in price, a strong bearish engulfing pattern appears after one bearish engulfing multiple bullish candles, followed by a continuous decline in price.

Figure 2 (screenshot from ETH/USDT 2-hour chart), at the rebound high point of a downtrend, a bearish engulfing pattern appears, and the price ends the rebound and continues to decline.

Figure 3 (screenshot from EOS/USDT 6-hour chart), after a continuous significant rise in price, a bearish engulfing pattern appears, followed by a substantial decline.

3. Bearish K-line combination - Tower top

Tower top, on the left is a medium bullish candlestick or large bullish candlestick; the middle consists of several small K lines, usually more than 5; on the right is a medium bearish candlestick or large bearish candlestick. Overall, it looks like a pagoda, hence the name tower top.

An effective tower top must meet the following criteria: the closing price of the last bearish candlestick must be below 50% of the previous large bearish candlestick entity; the tower top indicates that the buying power in the market is gradually weakening, achieving a balance between buying and selling, and ultimately leading to an increase in bearish strength.

After confirming the tower top is valid, we can determine the strength of the bearish pressure based on the position of the closing price of the last bearish candlestick. As shown, if the closing price of the bearish candlestick just exceeds the 50% threshold, the bearish strength is relatively weak; if the closing price of the subsequent bearish candlestick is basically on par with the opening price of the previous bullish candlestick, it is considered strong bearish strength; if the closing price of the subsequent bearish candlestick is significantly lower than the opening price of the previous bullish candlestick, the bearish strength is quite strong.

Of course, in actual market movements, the tower top is not as perfect as presented in our schematic diagram. We need to learn and apply the knowledge in real situations. Let's take a look at what the tower top looks like in the actual market.

Change 1, the middle consists of multiple small K lines with long shadows. The screenshot is from the BTC/USDT 6-hour chart, where a tower top pattern appears after a significant rise, followed by a continuous decline in price, breaking through the previous low.

Change 2, the middle part of the tower top is not entirely composed of very small K lines, and the K lines have a larger volatility. The screenshot is from the AAC/USDT 12-hour K line chart, where a tower top appears during a rebound, followed by a significant decline.

Let's review the content of this issue:

Three typical bearish combinations. The first is the evening star, indicating that darkness is about to descend; the second is the bearish engulfing, where the bears make a strong counterattack; the third is the tower top, where the bulls gradually surrender.

This section of the course ends here. In the next lesson, we will discuss the importance of the position of K-line combinations.