The Evening Star

The Evening star is a three-candle formation. It is an extension to the Bearish star pattern that we discussed earlier.

A bullish candle in the uptrend followed by a small body candle that opens above the body of the previous candle is a bearish star pattern with a body gap (gap between bodies).

The third candle appearing after the bearish star pattern opens below the body of the middle candle. It closes lower and within the body of the first candle. This formation is known as The Evening star.

The Evening star is a bearish trend reversal pattern. Higher the size and body of the third candle, stronger it is. The bearish star pattern suggests that the bullls are losing the momentum. A strong bearish candle followed after it indicates that bears have gained the momentum. The momentum is shifted to bears.

Ideal Evening star pattern would have shadow gaps between the candles. But it is very rare to find idea Evening star pattern. In real life, we need to be flexible with this requirement. The body gap between the candle would be sufficient to call it an Evening star pattern.

We should consider it as an Evening star pattern even if there is no gap between last two candles and other criteria are met. It is important to understand the essence of the pattern.

Click here to learn more about the pattern.

This pattern can be plotted on the chart by adding it from the study menu in TradePoint & RZone. The pattern is also available in the system builder section. By combining this pattern with other patterns and indicators, you can create your own trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.

 

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