Evening star candlestick pattern: The best bearish reversal pattern

downtrend


Evening Star candlestick pattern is yet another 3 candlestick pattern similar to Morningstar but opposite in interpretation, though the concept remains the same.

This is one the most important candlestick pattern to identify bearish trend reversal. This pattern is simple and most profitable when used effectively can help you to earn huge profit.

Unlike morning star, evening star is used after a strong uptrend to signify the start of a bearish trend. It is also 3 candlestick pattern and found when the bullish trend has found resistance level.

Let’s examine the behavior, nature, and use of evening star candlestick pattern.

Physical appearance of Evening Star Candlestick Pattern

You need to identify evening star only after a proper bullish trend.The 3 candlestick that forms the pattern is in order as

  1. The first candlestick formed is Long Bullish candlestick
  2. The second candle is formed with small body and long shadow
  3. The third candlestick is the confirmation candlestick, whose close should fall below the mid price value of first bullish candlestick.

The below image describes the same. Observe each candlestick carefully.


evening star example__1
Source: Economic Times

Market interpretation

The interpretation of Evening Star candlestick pattern is quite similar with Morningstar candlestick.

The formation of trend reversal starts with the second candlestick which describes indecision in the market. The small body with long shadow assures traders that indecision has caused in the market and now the buyers and sellers are in a wait and watch condition that who is going to drive the market.

This is confirmed with the formation of the third candlestick which is bearish and whose close price is below the mid price value of first bullish candlestick of the pattern.

 

Key elements to remember

  1. 3 candlestick pattern
  2. The first candlestick is long bullish candlestick followed by a candlestick with a small body and long tail.
  3. The second candlestick can be bearish or bullish, interpret the same thing that is indecision
  4. The third candlestick is bearish and  is a confirmation candle that should have close price below the mid value of first bullish candlestick
  5. This can efficiently interpret when found after an uptrend
  6. Works well when gets confirmed with another technical indicator.





Get reconfirmation with Stochastic Oscillator and RSI


How to trade with Evening Star candlestick pattern

Here you will find some trendy example that may help you how to analyze and identify Evening Star candlestick chart pattern.

evening star example__!
Source: Economic Times



evening star example__2
Source: Economic Times



evening star example__3
Source: Economic Times



Bottom Line

Evening Star candlestick is one of the popular candlestick patterns to identify bearish trend reversal.

The only thing to keep in mind is identifying this after a proper uptrend where trend finds some resistance. Along with this if you get confirmation with any technical indicator you can make your move.

Don’t force to assume formation of evening candlestick pattern, this may lead to false signal and loss in profit.

Remember, if you want to become a smart trader perform your actions quickly but not in a hurry.

Post Author: Sushant Putatunda

1 thought on “Evening star candlestick pattern: The best bearish reversal pattern

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    (August 7, 2017 - 2:21 pm)

    Hello to all, how is all, I think every one is getting more from this web page, and your views are
    nice in support of new users.

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