The Evening Star is a 3 bar pattern that forms following an up-trend, indicating a possible bearish reversal. It may therefore indicate a possible shift in market sentiment. To learn more, check out the video below:
What is the Evening Star Pattern
The first bar in theEvening Star pattern is a large body up-close whereas the second candle is a small body. The third and final bar is a large body down-close with a close below the midpoint of the the first candle’s body.
To determine the large and small body requirements, a minimum / maximum threshold has to be met. This is done by making a comparison to the average bar size found in the reference period. The minimum / maximum thresholds and the reference period used to establish the average are adjustable.
When identified as a reversal, theEvening Star pattern will occur during a minor bullish swing trend. The trend bias specifications are user selectable via the indicator dialogue box, as per the deviation type and multiplier settings. The bullish equivalent to this pattern is the Morning Star.
Although these patterns are considered a reliable indication of an emerging trend change, they should be combined with other technical indicators to confirm. For example, you may review our Indicator Library categories for momentum oscillators or trend analysis. More information on combining candlestick patterns with other technical indicators available here.
Other bearish candlestick patterns
Other bearish candlestick patterns include the bearish belthold, bearish engulfing, bearish harami, bearish harami cross, black marubozu, dark cloud cover, shooting star, gravestone doji, hanging man, evening doji star, long black candle, tweezers top, three black crows and the falling three methods.
TheEvening Star and the above patterns may be identified with our candlestick pattern indicator for NinjaTrader 8. Check out the LizardIndicators Premium Section for more information.
