Evening Star Candlestick Pattern

The candlestick formation known as the “Evening Star” formation is actually three candles, and is a very bearish pattern. The polar opposite of the “Morning Star”, this candlestick formation starts off with a very large and bullish candle. This is followed by a second candle that has a very short body, but closes above the first candle. The next candle opens below the middle candle, and then wipes out much of the gains from the previous two. In order to technically be an evening star, it needs to close at least below half the distance of the original candle. When this is seen at the top of an uptrend, is a sign that the market could very well reverse.

Evening Star Formation

Evening Star Formation

Looking at the chart below, you can see that the buyers were firmly in control, but once the market formed the evening star, and you can see that the trend changed. A more conservative way to trade this signal might be to wait until the original candle is completely wiped out and broken below, but regardless, you can see that the sellers completely reverse the situation. At the top of an uptrend, the evening star can be a very powerful trade signal.

Evening Star in action.

Evening Star in action.

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