Evening Star Pattern

Evening Star – Basic Multiple Candlestick Pattern

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Evening Star Pattern is a multiple candlestick pattern which consists of three candlestick which occurs during uptrend. Evening Star is a bearish reversal pattern which signals the trend reversal from bullish to bearish. First candle is large bullish candle, second one candle is indecisive candle and third one candle is large bearish candle which closes approximately near to opening of first candle which signals trend reversal. This pattern is used in technical analysis for stock selection.

Evening Star Pattern –

Evening Star Pattern

As we can see above, first candle is a large bullish candle which shows strength of bullishness, so it means bulls are still in control to push market to higher levels. The second one candle is indecisive candle which shows no strength of bullishness or bearishness. Third candle is a large bearish candle which closes near to opening of first large bullish candle which shows strong bearishness. Third bearish candle signals the reversal of trend because it shows that bears are stronger than bulls here. So in this way, this evening star shows trend reversal from bullish to bearish.

In above pattern we can see the second candle opens higher than the close of first bullish candle (gap up) and third candle opens lower than second candle close (gap down).

Evening Star Pattern

As we can see in the above chart, the price is making lower highs which is shown by using blue line. The blue circle shows the formation of evening star pattern from where price reversed. The blue line is representing the resistance level and whenever evening star forms at the resistance level then it gives us good opportunity to go for short. When next candle after the third large candle of evening star breaks low of third candle then we can place short order, we can put stop loss above the high of second indecisive candle.

Evening Star Pattern

Above chart shows when evening star formed at the resistance level as you can see in chart it create good opportunity to go for short or sell. We can put stop loss above the high of second candle and set target at the next support level.

So we have studied that Evening Star is a bearish reversal pattern which helps us to identify trend reversal.

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