Evening Star

 

The Evening Star candlestick pattern is a bearish reversal pattern that occurs at the top of an uptrend, signaling a potential reversal in price direction. It consists of three candles:

1. First candle: A large bullish (green or white) candle that confirms the uptrend.

2. Second candle: A small-bodied candle (can be bullish or bearish) that gaps up above the first candle, showing indecision in the market. This candle is often called the "star" because it appears as a gap away from the first one.

3. Third candle: A large bearish (red or black) candle that closes well into the body of the first candle, confirming the reversal. This candle should ideally close below the midpoint of the first candle.

Key characteristics of the Evening Star pattern:

• Location: Appears at the end of an uptrend.

• Confirmation: The third candle should ideally close below the midpoint of the first candle to confirm the reversal.

• Indecision: The second candle reflects market indecision, with a smaller body compared to the first and third candles.

• Bearish signal: The pattern signals a potential trend reversal from bullish to bearish.