Evening Star Pattern

Question 1

What is the Evening Star Pattern?

Answer 1

• An evening star is a bearish stock-price chart pattern consisting of three candles: a large green candlestick, a small-bodied candle, and a red candle.
• Evening star patterns are associated with the top of a price uptrend, signifying that the uptrend is nearing its end.

Question 2

How an Evening Star Works?

Answer 2

• The first Candle consists of a large green candle signifying a continued price rise.
• The second Candle consists of a smaller candle that shows a more modest price increase.
• The third Candle shows a large red candle that opens at a price below the previous Candle and then closes near the middle of the first Candle.

Question 3

How to identify the Evening Star formation on charts?

Answer 3

• Establish an existing uptrend.
• Large bullish candle.
• Small bearish/bullish candle
• Large bearish candle
• Subsequent price action

Question 4

What is the Evening Star Doji?

Answer 4

• Doji candles can be observed as the market opens and closes at the same level or very close to the same level.
• The appearance of the bearish candle after the Doji provides this bearish confirmation.

Question 5

How to trade the Evening Star Pattern?

Answer 5

• Once the formation has been completed, traders can look to enter at the opening of the very next candle.
• Targets can be placed at previous levels of support or previous area of consolidation.
• Stops can be placed above the recent swing high.