How to Spot the Evening Star Pattern and Maximize Your Trading Profits

The evening star pattern is a reversal pattern formed after the market has consolidated in the downtrend. When the way appears, the downtrend has been completed, and the uptrend may be forming. This pattern indicates a reversal.

evening star pattern

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The evening star pattern is characterized by a candle with a wick and body that is reversed after the candle closes and opens up. A reversal candle indicates a reversal in trend, which may be bullish or bearish. The pattern can appear on any time frame, from a candlestick chart to a bar chart.

What is the Evening Star Candlestick Pattern?

The evening star candlestick pattern is a three-candle reversal pattern consisting of a long bullish candle, a small-bodied candle, and a large white candlestick. Technical analysts use the evening star pattern to indicate a change in the trend direction.

The first day of the evening star pattern is a long bullish candle, followed by a small-bodied candle that gaps up from the first day and closes lower than the previous day’s close. The small-bodied candle is typically bullish or bearish, with the attosecond day’s body above the first day’s body.

This pattern suggests that prices will fall or the market will turn down.

Formation of Evening Star Candlestick Pattern:

The evening star candlestick pattern consists of three candles. The first of the candlesticks will be a red candle, the second a small-bodied candle, and the third a large white candle. This pattern is a reversal pattern usually found at the end of a downtrend. Real-world examples of the evening star pattern can be found in the form of three down-trending candlestick patterns: the doji, the engulfing bearish engulfing candle, and the morning star. These patterns indicate indecision in the market, indicating that prices could trend up or down.

The doji candlestick is similar to an evening star pattern, but with one difference – the doji candle has a closing price close to the candlestick’s opening price. The engulfing bearish candle appears as a large and smaller body candle on the same trading day. The morning star shows three bullish candlesticks on consecutive trading days with a long body candle and two smaller bullish candles on either side.

Example of an Evening Star Pattern

An evening star is a candlestick pattern that appears at the end of an uptrend, signaling a bearish reversal. It comprises three candlesticks: the red candle, the doji, and the green candle. The red candle is the close price of the previous day’s trading session. The doji is a sideways trading pattern characterized by a flat body and a small price range. The green candle indicates the close price of the current day’s trading session. All three candlesticks must be of similar length and shape.

The evening star pattern is a bearish reversal pattern with a relatively high chance of accuracy. It requires that the doji candlestick be higher than the surrounding bodies, indicating an uptrend has ended and a bearish trend may begin.

The evening star pattern is easy to identify and act upon, making it a reliable predictor of bearish reversals.

evening star explained

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Four elements to consider for a morning star formation

The Morning Star formation is a powerful candlestick pattern. It comprises three elements: a long bearish candle, a gapping down day, and a bullish candle. The extended bearish candle is the first element to consider for the Morning Star formation. This indicates that the market has been in a downtrend. The second element for the Morning Star formation is a gapping down day. This means the next day’s opening price will be lower than the previous day’s closing price. A long bullish candle is the third element to consider for the Morning Star formation.

This indicates that there has been an increase in buying pressure, and buyers are pushing prices higher. Finally, the fourth element for the Morning Star formation is a strong close above or near the opening price of the gap-down day. If this happens, it confirms that buyers have won out and are now in control of price action. Therefore, these four elements should be considered when looking at any potential Morning Star formations on any charting platform you use.

How to Easily Identify Evening Star Patterns

The evening star pattern is a candlestick charting pattern that consists of three candlesticks – the sizeable bullish candle (Day 1), the small bullish or bearish candle (Day 2), and the sizeable bearish candle (Day 3). These candlesticks are all of the same types, meaning they all have the same opening and closing change in price. A combination of candlestick patterns and indicators can be used to identify the evening star pattern. Look for a significant green or white body to extend a current uptrend, followed by a small-bodied candle with even buying and selling pressure. After the evening star pattern has been confirmed, it’s crucial to analyze the candlestick patterns and Metatrader 4 indicators to identify other ways that may be present in the market. To do this, look for recognizable ways such as morning star, doji star, spinning top, engulfing bar, and Piercing Line.

How to identify an Evening Star on Forex Charts

An evening shooting star is a three-candle pattern usually used in forex trading to recognize entry and exit positions. The design comprises a large bullish candle, a small bearish/bullish candle, and a red candle at the end of an uptrend. It indicates that a reversal and subsequent downtrend are about to occur.

The first step in recognizing the pattern is identifying the existing trend on the example chart. This should be an upward or downward trend with the price increase. The second step involves looking for a large bullish candle, a small bearish/bullish candle, and the evening star candle itself. The trend changes when the evening star appears on the chart, and a reversal may be imminent.

The evening star can also appear as the final third candlestick of an up-trending market or as the first candlestick of a down-trending call opens before the price reverses direction.

Traders can use the morning star pattern as a reliable indicator to identify short-term reversal patterns in forex trading.

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How reliable is the Evening Star in Forex Trading?

The evening star candlestick pattern is commonly used in technical analysis of the forex market. It is a reversal candlestick pattern that depicts the price of the asset closing higher than the opening price.

The evening star pattern should be assessed in line with the current trend and supporting evidence, such as the RSI and MACD indicators. This pattern is less likely to gap as a stock does, and it opens close to the previous closing level. The evening star candlestick pattern is considered a “topping” signal, which means it could be time to cash out before the stock turns down. Each candlestick provides four pieces of information – the opening price, the closing price, the highest point of the session, and the lowest point. The evening star candlestick pattern can help traders assess whether an asset price has hit a high or low point during the session.

Evening Star Pattern: How to Identify a Bearish Reversal in Crypto

The Evening Star pattern is a bearish reversal pattern used in crypto trading which can be identified by a long white candle, followed by a small-bodied candle with either no upper shadow or a very small one, and then finally, a long black candle. This pattern suggests that the buyers may have reached their limit and that the sellers are now taking control of the market.

Traders should look for this pattern to identify a potential bearish reversal in the crypto market. Furthermore, traders should also examine the volume and confirm that it is decreasing to validate the bearish reversal. Establishing this pattern will signal a potential shift from bullish to bearish.

Evening Star Pattern vs. Other Trend Reversal Patterns

An evening star pattern is a technical analysis tool used to identify the reversal of upward price momentum. It is a candlestick pattern that appears at the end of an uptrend, signaling the beginning of a downtrend. The evening star pattern is a clear reversal pattern in forex trading and intra-day and swings trading.

To trade the evening star pattern successfully, traders must assess the patterns with the current trend, other supporting evidence like RSI and MACD indicators, and the market environment. The evening star pattern can capture profits when the market moves sharply upward or downward. However, it may not work in volatile markets where prices are erratic and fast.

When using evening star patterns in forex trading, traders should consider the market environment first and foremost before taking any trades.

Using the evening star patterns effectively and analyzing them with other indicators can generate profits in the forex market.

Evening Star vs. Head and Shoulders

The evening star pattern and the head and shoulders pattern are two reversal patterns that traders often look out for. The evening star pattern develops in three candles, while the head and shoulders pattern may take more than five to complete.

The head and shoulders pattern forms three more petite tops within the larger design, whereas the evening star pattern takes the shape of one rounded top. The evening star pattern is a bearish reversal pattern that forms after an uptrend. In contrast, the morning star pattern is the opposite of the evening star pattern, creating a bullish reversal after a downtrend.

The two patterns share some similar characteristics but also have their differences. You can spot the evening star pattern by watching the first candle of an uptrend closely. Watch for a bearish reversal signal when it opens higher than the previous close by a small margin. If it closes lower than the previous close by a small margin or gaps down, you should look for a bearish trend confirmation. Conversely, you should look for a bullish signal if it closes higher than the last close by a small margin or holes up.

evening star vs head and shoulders

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Evening Star vs. Bearish Harami

The evening star pattern (also known as bearish harami) is a reversal pattern that develops during down-trending markets. The design consists of three candlestick bodies: the first signaling the start of the way, the second candle the peak of prices, and the third the low point of the bullish trend. It is a bearish reversal pattern and indicates that the market will likely undergo a bearish reversal soon.

The evening star pattern follows the shape of the bearish harami candlestick formation famous among day-trading cryptocurrency traders. Besides, the evening star pattern also forms when investor sentiment turns bullish towards the end of a downtrend.

The evening star pattern can be used to predict bearish momentum and accurately forecast market reversal.

star vs harami pattern

Evening Star vs. Triple Top

The evening star pattern is a bullish reversal candlestick pattern that forms after an uptrend. To create the evening star pattern, the market must close above the previous day’s high and below the last day’s low. The design requires a minimum of three candlesticks to form and is a bearish reversal pattern.

The triple-top pattern is the opposite of the evening star pattern. In a downtrend, the market closes below the previous day’s low and above the last day’s high.

The evening star pattern can be included within the triple top design, but not the other way around. A trader must differentiate between the two marks to trade them successfully.

Strengths and Weaknesses of this Pattern?

The evening star pattern is a well-defined and straightforward reversal pattern. The design features an uptrend, followed by a large bearish candlestick. This candlestick has a top and a bottom, and the top is larger than the bottom. This pattern is followed by an indecisive candlestick, usually containing two small tops or two tiny bottoms.

The evening star pattern is the bearish candlestick formed after the top of the uptrend. The candlestick has a long body and a small tail shaped like an upside-down star. The morning star pattern is the bullish candlestick formed after the bottom of the downtrend. This candlestick has a short body and large tail, resembling an upside-down star.

The evening star pattern has the same characteristics as the morning star pattern except that the candle closing price of the evening star is lower than the morning star candle closing price by more than 0.5%. Additionally, if the evening star candlestick closes higher than the morning star candlestick by more than 0.5%, it becomes an evening star reversal signal.

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Frequently Asked Questions

How do technical analysts trade when they see this pattern?

Technical analysts use the evening star pattern to identify potential reversal points in a security or market trend. The practice involves three candlesticks, the first of which is a significant bearish candle followed by a small bullish candle. Another sizeable bearish candle and signals then follow this that the buyers have become exhausted and sellers are beginning to take control.

Traders will typically look for confirmation that this reversal is taking place, and if so, they may enter either a short or long position depending on their strategies. If entering a temporary post, traders typically set their stop-losses just above the high of the second candle, while those looking to go long may set their stop-losses just below the low of the second candle. In either case, it’s important to remember that technical analysis should be used with other factors, such as fundamental analysis when making trading decisions.

Is evening Star a reversal pattern?

Yes, the evening star is a reversal pattern.

It’s a bearish counterpart of the morning star pattern, which signals the beginning of an uptrend. So, if you see the morning star pattern appearing on the chart, it’s a good indication to sell off your holdings, as the evening star pattern is likely to follow suit.

As for when evening star should be used in technical analysis, the pattern should be assessed with current trends and supporting evidence like RSI and MACD indicators.

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What are the different types of evening stars?

The evening star pattern is a bearish pattern that technical analysts use to detect when a trend is about to reverse. It consists of three candles: a large white candlestick, a small-bodied candle, and a red candle. The large white candlestick appears on the first day, followed by a smaller black candle that can be white, red, or any color you choose. The small-bodied candle appears on the second day, followed by the red candle, which gaps below the middle candle. Lastly, the tall black candle appears on the last day that gaps below the central candle.

The opposite of the evening star pattern is the morning star pattern. This bullish indicator pattern consists of three candles: a large white candlestick, a small-bodied candle, and a green candle.

What is the difference between hammer and evening star?

The evening star pattern is a bullish reversal pattern after a downtrend. The design consists of an uptrend followed by a sudden reversal, resulting in a rally. The hammer is a reversal pattern that occurs after an uptrend and predicts a rapid price decline.

Is there a difference between the evening and morning star patterns?

There is a difference between the evening star pattern and the morning star pattern in technical analysis. The evening star pattern is the bearish counterpart of the morning star pattern and is used to signal a top reversal. The evening star pattern requires that the body is higher than the surrounding bodies, whereas the morning star pattern requires that the shadows are clear of the preceding and proceeding shadows. This pattern is considered a reliable predictor of a bearish reversal with 71% accuracy, while the morning star pattern is a bullish reversal pattern that forms after a downtrend.

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Conclusion

The evening star pattern is a reversal candlestick pattern that signals the end of an up-trending market. It occurs when the first day of the design closes lower than the second day. Besides reversal patterns, evening star candlesticks act as continuation candlestick patterns. Evening star candlestick patterns are usually followed by bearish market trends and are reversal patterns in the long-term trend. The evening star pattern can be easily identified on the technical analysis charting platform by comparing the first-day and second-day close prices.

Author: Dominic Walsh
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I am a highly regarded trader, author & coach with over 16 years of experience trading financial markets. Today I am recognized by many as a forex strategy developer. After starting blogging in 2014, I became one of the world's most widely followed forex trading coaches, with a monthly readership of more than 40,000 traders! Make sure to follow me on social media: Instagram | Facebook | Linkedin | Youtube| Twitter | Pinterest | Medium | Quora | Reddit | Telegram Channel

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