What is an evening star chart pattern?

The evening star chart pattern is a bearish reversal pattern. It consists of three different candlesticks or three different days.

The first candlestick consists of a large up day. The stock is pushed higher and the bulls are in control. The second day the stock opens and tries to go higher.

This time the stock is unable to gain any upward movement. The bulls and bears are at a pretty equal stance. This indicates that the bulls might be losing power and buying pressure could be fading.

The third day of the pattern is a down day. Here the stock gives into selling pressure and starts to fall fast. This last day can mark the end of a bullish rally. Below is an example of what an evening star pattern looks like.

Tip

This pattern only makes a sell signal when all of the candlesticks occur. If all three of the candlesticks don’t appear or they do not come in that order this would not be the same pattern.

Other Candlestick Patterns

Knowing the other candlestick patterns can help you gage whether a stock is heading up or down. They were first created in Japan to measure the movement of the rice market and have been used successfully ever since. Here are some of the major one.

Ladder Bottom - This occurs at the bottom of a downtrend and indicates a possible reversal

Falling Three Method - A bearish signal

Downside Tasuki Gap - A 3 day bearish signal