spot_img
HomeCANDLESTICKSEvening Star Pattern Explained

Evening Star Pattern Explained

-

An Evening Star is a group of candlesticks that create a chart pattern used in technical analysis to signal a high probability that a current uptrend in price could reverse. This is a bearish candlestick pattern created by three candles in a row consisting of a large white/green candlestick, a small candle that is usually black/red, and then a red/black candlestick.

The Evening Star candlestick chart pattern is a valid technical indicator that a future decline in price is a high probability. It takes three full days of opens and closes through three days to fully form.

  1. Day one: Large bullish candlestick.
  2. Day two: small candlestick that can be bullish or bearish and higher than the previous day. 
  3. Day three: Large bearish candle that opens at a price lower than the previous day’s candle and then closes near the middle of the first day’s candle price range. 
  • The Pattern has the most meaning after a strong uptrend and can signal the market is topping out. 
  • This Candlestick chart pattern is used by technical analysts to signal the timing for a short selling position entry or warning it is time to lock in long position profits. 
  • The Evening Star is not a common pattern but can be a meaningful signal showing a failure to find buyers at higher price levels.

To increase the odds of success of this pattern, traders can use other indicators like overbought/oversold price oscillators, moving averages, and trendlines to confirm a confluence for more meaning in the full chart context. An Evening Star pattern formed at an overbought RSI level, a key long-term moving average overhead, or at a upper channel trendline has a higher probability of marking a chart top. 

The inverse chart pattern of the Evening Star is the Morning Star, that is viewed as a bullish reversal near a chart bottom.

LATEST POSTS

How to Trade Using Pin Bar Like a Pro

The pin bar is a candlestick bar which is a very powerful formation if you use it correctly. You can catch significant market moves as this bar signals to take the trade from the beginning of the trend. We find these ideal pin bars when the market moves sharply and then dries the volatility or loses the strength of its trend.

Simple Ways to Use Candlestick Patterns

Candlestick Patterns are a type of chart that clearly represents the behavior of buyers and sellers through visual price action patterns. They are a very...

Doji Star Candlestick Pattern

The doji star is a neutral signal that occurs when a single candle has opening and closing prices that are close to the same.

Three Black Crows Candle Pattern Explained

Three black crows is a bearish three candlestick chart pattern formed by price action closing lower than the open and below the previous day’s low for three days in row. It is created by three long bearish candlesticks that stair step downward

Follow us

23,698FansLike
10,400FollowersFollow
722FollowersFollow

Most Popular

ADVERTISEMENTS

- Advertisement -spot_img