Now that you know the morning star candlestick pattern, it’s time to learn the evening star.
What is an Evening Star Candlestick Pattern?
The evening star is simply an “upside-down morning star.” If you can reverse the logic, you’ll immediately understand how an evening star works.
The partner of the morning star is the evening star, which forms at the end of an uptrend (it’s the top), potentially signaling a reversal into a downtrend.
An evening star formation, which includes three or more candles, is characterized by a larger bullish candle, followed by a small-bodied bullish or bearish candle (a spinning top or a doji), followed by a larger bearish candle.
In order to qualify as an evening star formation, the third bearish candle must close at 60% or more of the original bullish candle’s opening (counting the top of the middle candle as 0 and the opening price of the original bullish candle as 1).
As you can see in the image below, an evening star formation can consist of more than three candles.
The defining characteristics are the initial larger bullish candle and a final larger bearish candle that closes at 60% or more of the initial bullish candle’s opening. In between those two candles can be a single doji or spinning top, or several.
You can confirm the evening star once the final bearish candle has formed.
If you identify an evening star and decide to trade it, sell at the opening of the candle that follows the evening star’s final bearish candle. Set your protective stop loss order at the last level of resistance (which will be the high of the evening star’s middle candle).
Trading evening stars can be particularly lucrative if you have a convergence (that is, the reversal implied by the evening star is further implied by a trendline or some other indicator).
Another cool candlestick pattern is the tweezer top candlestick pattern, which I’ll explain more about in the next blog post.
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