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THE CANDLESTICK TRADING BIBLE
The evening star pattern
The evening star pattern is considered as
a bearish reversal pattern
that usually occurs at the top of an uptrend.
The pattern consists of three candlesticks:
-The first candle is a bullish candle
-The second candle is a small candlestick, it can be bullish or bearish or
it can be a Doji or any other candlestick.
-The third candle is a large bearish candle. In general, the evening star
pattern is the bearish version of the morning star pattern. See the
example below:
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THE CANDLESTICK TRADING BIBLE
The first part of an evening star is a bullish candle; this means that bulls
are still pushing the market higher.
Right now, everything is going all right. The formation of the smaller
body shows that buyers are still in control but they are not as powerful
as they were.
The third bearish candle indicates that the buyer’s domination is over,
and a possible bearish trend reversal is likely to happen.
See another chart that illustrates how the evening star could represent
a significant trend reversal signal.
As you can
see the market was trending up, the first candle in the
pattern indicates a long move up.
The second one is a short candle indicating
price consolidation and
indecision.
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THE CANDLESTICK TRADING BIBLE
In
other words, the trend that created the first long bullish
candlestick is losing momentum. The final candlestick gaping lower
than the previous candlestick indicating a
confirmation of the
reversal and the beginning of a new trend down.
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