Evening Star Pattern: Bearish Reversal
The evening star is a three-candle bearish reversal pattern that forms at the top of an uptrend.
What Is the Evening Star Pattern?
The evening star is a three-candle bearish reversal pattern that appears at the top of an uptrend. It's the bearish counterpart to the morning star and signals that buying pressure is fading. The pattern shows a gradual transition from bullish control to bearish control over three sessions.
What the Pattern Looks Like
The evening star consists of three candles:
- First candle: A long bullish (green) candle in line with the existing uptrend
- Second candle: A small-bodied candle that gaps or moves above the first candle's close, showing indecision
- Third candle: A long bearish (red) candle that closes well into the first candle's body
The middle candle is the star — a small body indicating exhaustion. Ideally, the third candle closes at least halfway down the first candle's body.
What It Signals
The evening star signals that buying pressure is exhausting and sellers are taking control. The first candle shows strong buying, the second shows indecision, and the third shows strong selling — a clear handoff of momentum from bulls to bears.
The evening star is most powerful when it forms at a major resistance level or after an extended, overextended rally.
How to Trade It
- Verify the uptrend. The pattern requires a preceding advance to be valid.
- Look for gaps. Gaps between the first and second candle, and the second and third candle, strengthen the signal.
- Enter on the third candle. Traders often enter short when the third candle closes, especially after it pushes well into the first candle's body.
- Place your stop-loss above the high of the middle (star) candle.
- Target recent support. Aim for the most recent swing low.
Comparison: Morning Star vs. Evening Star
| Feature | Morning Star | Evening Star |
|---|---|---|
| Trend context | After downtrend | After uptrend |
| Signal type | Bullish reversal | Bearish reversal |
| Middle candle | Small body | Small body |
Trading Example
A stock rises from $40 to $58 over six weeks. On day 42, a long green candle closes at $58.20. Day 43 opens at $58.50, trades in a tight range, and closes at $58.40 — a small-bodied star. Day 44 opens at $58.30, then sells off to close at $55.50, well into day 42's body. Traders may enter short with a stop above $58.50.
Common Mistakes
- Trading the pattern without a preceding uptrend
- Entering before the third candle confirms
- Ignoring overhead resistance
The evening star is a favorite for swing traders looking to short tops, because the three-candle structure provides clear visual confirmation of a momentum shift.