Evening Star

The “evening star” is the small-bodied middle candle of a 3-bar pattern that can provide an early indication of a reversal from a bullish to a bearish trend, typically with an opening price at or a gap above the close of the previous candle (a gap indicates space between the body of the previous candle and the open of the consequent candle). The pattern represents a potential top, and therefore a potential signal to sell. These are the characteristics of the three candles:

  1. A long bullish candle
  2. A small-bodied bullish or bearish candle or a doji that opens at or above the close of the previous candle.
  3. A black candle that opens at or below the low point of the previous candle’s body and closes at or below the center of the first candle.
    In order for the pattern to be valid, the sequence of candles must be as described above.
    Moreover, the pattern should appear in the context of an uptrend in order to signal a reversal and the start of a downtrend.