Definition
Bearish Evening Star consists of three candles and signals a trend reversal. The first day is a long white candle. The second candle’s body is small and its colour is irrelevant. This candle forms a Star with a gap in the trend’s direction. The third day is a black candle with its closing price in the body of the candle on the first day. The formation clearly shows the trend’s reversal.
- Trend: Reversal
- Expected trend: Bearish
- Previous trend: Bullish
- Reliability: High
- Type: Bearish
- Number: 3
Recognition
- The market is in an upward trend.
- The first day is a long white candle.
- The second candle is small, its colour is irrelevant.
- The third day is a black candle.
Interpretation
The first white candle of the formation is followed by a gap upwards. The colour of the candle on the second day does not matter. The trading range becomes narrower and the trend appears to stop. The trust in the ascending trend has decreased. Ideally, there are gaps below and after the middle candle in the Bearish Evening Star formation. The second gap is rare. Its absence does not weaken the formation’s signal. The third day confirms the trend reversal.
Important factors
The number of the Dojis can be one, two, or three. The colour and the gaps of the star is not important. The formation is uncommon and highly reliable, but requires a confirmation. The confirmation could come from a black candle with a downward gap or a lower closing price.
