Evening Star Pattern

Forex Maniac > Japanese Candlestick Patterns > Evening Star Pattern

The Evening Star is the bearish counterpart of the Morning Star. Its name is derived by analogy with the Morning star, appearing before the onset of darkness. The Evening Star pattern is a reversal signal at the peak, and that is why it becomes the signal for movement only if it appears after an upward trend.

Structure

The Evening Star pattern consists of three candlesticks. The first candle has long white (upward) body, followed by candle, called a Star. This star is the first signal of the market approaching the top. The third candle has long black (downward) body that penetrates deeply into the first body and confirms the trend reversal. In a classic definition of this pattern candlestick Star should have a price gap from the highs of the first and third candles. However, in modern markets, such gaps occur less frequently. The gap between the closing price of the first candle and the Star will be enough to identify a pattern. The main criterion is the degree of penetration of the third candle into the first body. In other words, how the price falling on the third candle negates the progress of the preceding two candles.

Evening Star

Psychology

As in the interpretation of the Morning Star pattern, the second candle, the Star, means the uncertainty and struggle between Bears and Bulls. The third candle confirms the victory of the Bears and trend reversal.

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