Evening Star

An Evening Star is a bearish reversal candlestick pattern made up of three candles: a large bullish candle, a small-bodied candle, and a bearish candle. This pattern typically appears at the peak of a price uptrend, indicating that the uptrend is likely coming to an end.

The Evening Star is the opposite of the Morning Star pattern, which is considered a bullish reversal candlestick pattern.

To recognize an Evening Star pattern, look for the following characteristics:

• The Evening Star consists of three candlesticks, with the middle candlestick referred to as the star.
• The first candlestick in the Evening Star must be a bullish candle (white or green) with a large body.
• The second candlestick is the “star,” which has a short body and does not touch the body of the first candlestick.
• The gap between the bodies of the first and second candlesticks creates the Doji or Spinning Top appearance of the “star.”
• The star can also form within the upper shadow of the first candlestick.

The star serves as the initial sign of weakness, indicating that buyers were unable to push the price significantly higher than the close of the previous period. This weakness is further confirmed by the candlestick that follows the star.

The third candlestick must be a bearish candle that closes well within the body of the first candlestick.

This Evening Doji Star acts as a bearish reversal of the upward price trend, as the price rises into the pattern and subsequently breaks downward. A downward breakout occurs when the price closes below the bottom of the three-candlestick pattern. Given that the price in the last candle is already near the low, a downward breakout is anticipated.