Evening Star Candlestick Pattern

In technical analysis, candlestick patterns help traders identify potential market reversals and trend continuations. One of the most reliable bearish reversal patterns is the Evening Star. This pattern often appears at the top of an uptrend and signals a possible shift from bullish to bearish momentum.

What Is the Evening Star Pattern?

The Evening Star is a three-candlestick pattern that forms after a strong upward trend. It indicates that buying pressure is weakening and sellers may soon take control.

Structure of the Evening Star

1. First Candle (Bullish):
   A long green (or white) candle that confirms strong buying momentum.
   
   

2. Second Candle (Indecision):
   A small-bodied candle (doji or spinning top) that gaps up, showing market indecision.
   
   

3. Third Candle (Bearish):
   A strong red (or black) candle that closes well into the body of the first candle.
   
   

   
   
   

This sequence visually resembles a star at the top of a price move—hence the name Evening Star, symbolizing the “end of the day” for the bullish trend.

Psychology Behind the Pattern

• Bulls dominate during the first candle.
  
  

• The second candle shows hesitation—buyers are losing confidence.
  
  

• Sellers take control in the third candle, pushing prices sharply lower.
  
  

This shift in sentiment often leads to a trend reversal.

How to Identify a Valid Evening Star

To improve reliability, ensure:

• The pattern appears after an uptrend
  
  

• The third candle closes below at least 50% of the first candle’s body
  
  

• Higher trading volume on the third candle
  
  

• Confirmation from indicators like RSI, MACD, or resistance levels
  
  

Trading the Evening Star Pattern

Entry Strategy

• Enter a short position after the close of the third candle
  
  

• Conservative traders wait for further bearish confirmation
  
  

Stop-Loss Placement

• Place the stop-loss above the high of the second candle
  
  

Profit Targets

• Nearest support level
  
  

• Previous swing low
  
  

• Risk-to-reward ratio of at least 1:2
  
  

Evening Star vs Morning Star

Feature	Evening Star	Morning Star
Trend	Uptrend	Downtrend
Signal	Bearish reversal	Bullish reversal
Market Bias	Selling	Buying

Advantages and Limitations

Advantages

• Easy to identify
  
  

• Works across multiple timeframes
  
  

• Strong reversal signal when confirmed
  
  

Limitations

• Less reliable in sideways markets
  
  

• Requires confirmation to avoid false signals
  
  

• Can fail during strong bullish trends
  
  

Final Thoughts

The Evening Star pattern is a valuable tool for traders looking to identify potential market tops. While powerful, it should never be used alone. Combining it with support-resistance analysis, volume, and momentum indicators significantly improves accuracy.