The evening star is a powerful three-candle bearish reversal pattern that signals the end of an uptrend. Named after the planet Venus which appears in the evening sky before darkness, this pattern represents the fading of bullish momentum. When you spot an evening star at the top of a rally, it often marks the beginning of a significant decline.
What is an Evening Star Pattern?
An evening star consists of three candlesticks that together signal a bearish reversal. The pattern shows the transition from buyer control to seller control over three trading sessions.
The three candles: First, a large bullish candle continues the uptrend. Second, a small-bodied candle (often a doji or spinning top) shows indecision at the top. Third, a large bearish candle confirms the reversal. The middle star candle is the key transitional element.
Evening Star Requirements
For a valid evening star pattern, these conditions must be met:
First Candle (Bullish)
- Large green candle with a substantial body
- Continues the existing uptrend
- Shows buyers still in control
Second Candle (The Star)
- Small-bodied candle (can be red or green)
- Gaps up from the first candle (opens above first candle close)
- Represents indecision and potential trend change
- Often a doji or spinning top
Third Candle (Bearish)
- Large red candle with a substantial body
- Opens below the second candle close
- Closes well into the first candle's body (at least 50%)
- Confirms the reversal
Evening Star Example
Stock XYZ has rallied from $80 to $100 over several weeks.
- Day 1: Large green candle, opens $98, closes $100
- Day 2: Small doji, opens $101, high $101.50, low $100.50, closes $101
- Day 3: Large red candle, opens $100.50, closes $96
The pattern is complete. The third candle closes below the midpoint of the first candle, confirming the reversal.
The Psychology Behind Evening Star
Understanding the psychology helps you recognize why this pattern is so reliable:
Day 1: Continuation of Buying
The uptrend continues as buyers push prices higher. Greed and optimism dominate the market. The large green candle shows strong buying pressure and bullish sentiment.
Day 2: Indecision at the Top
The small star candle shows that buying pressure is weakening. The gap up on the open initially looks bullish, but prices cannot advance much further. Buyers and sellers are in balance at elevated prices. This is the transition period.
Day 3: Sellers Take Control
The large red candle confirms that sellers have taken over. The gap down on the open shows overnight selling pressure. Strong selling throughout the session drives prices lower, erasing most or all of the first day's gains.
How to Trade Evening Star Patterns
Entry Strategies
Conservative Entry
- Wait for the third candle to close
- Enter short on the next candle open or when price breaks below the third candle low
- Lower risk but may miss some of the move
Aggressive Entry
- Enter short during the third candle once it is clearly bearish
- Higher risk but better entry price
- Only for experienced traders
Stop Loss Placement
Place your stop loss above the high of the star candle (second candle). This is the logical invalidation point. If price rises above this level, the pattern has failed and the uptrend may continue.
Profit Targets
- Target 1: Previous support level or swing low
- Target 2: Measured move equal to the pattern height
- Target 3: Key Fibonacci extension level
Evening Star Variations
Evening Doji Star
When the second candle is a doji (open equals close), the pattern is called an evening doji star. This variation is considered more powerful because the doji shows perfect indecision at the top before the bearish reversal.
Three Outside Down
Similar to evening star but with the third candle completely engulfing both previous candles. This is an even stronger bearish signal.
Factors That Strengthen Evening Star
- Volume pattern: High volume on third candle confirms selling pressure
- Gap presence: Gaps between candles show stronger sentiment shift
- Resistance level: Pattern forming at key resistance increases reliability
- Overbought indicators: RSI above 70 adds confirmation
- Third candle size: Larger bearish candle means stronger reversal
Real Trading Scenarios
Scenario 1: Evening Star at All-Time High
A stock reaches an all-time high and forms an evening star pattern. The lack of historical resistance above means the star candle represents pure exhaustion. These setups often lead to significant pullbacks as there is no prior overhead supply to attract buyers.
Scenario 2: Evening Star at Round Number Resistance
A stock rallies to a major round number like $100 or $50 and forms an evening star. Round numbers attract profit-taking and short sellers. The confluence of the psychological resistance and the candlestick pattern creates a high-probability short setup.
Scenario 3: Evening Star with Bearish Divergence
A stock makes new highs while RSI makes lower highs (bearish divergence). An evening star forming at this point has extra significance. Multiple bearish signals aligning increases the probability of a significant reversal.
Evening Star vs Morning Star
The evening star and morning star are mirror images of each other:
Pattern Comparison
- Evening Star: Appears after uptrend, bearish reversal signal
- Morning Star: Appears after downtrend, bullish reversal signal
- Both have three candles with a small star in the middle
- Both require confirmation from the third candle
Common Mistakes to Avoid
- No prior uptrend: The pattern needs an uptrend to reverse
- Third candle too small: It should close well into the first candle
- Ignoring gaps: Traditional evening stars have gaps; without gaps, the signal is weaker
- Wrong stop placement: Stop above the star, not above the entire pattern
- Not waiting for completion: Do not trade until the third candle closes
Managing Evening Star Trades
Once you enter a short position based on an evening star:
- Move stop to break-even: Once price falls 1x your risk amount, move stop to entry
- Scale out: Take partial profits at first support, hold remainder for larger moves
- Watch for morning star: If a morning star forms during decline, consider taking profits
- Trail your stop: Use the previous candle high as a trailing stop
Analyze Your Evening Star Trades
Pro Trader Dashboard tracks all your trades and lets you filter by pattern type. See your win rate on evening star setups and identify what makes your best trades successful.
Summary
The evening star is a reliable three-candle bearish reversal pattern that appears at the top of uptrends. It consists of a large bullish candle, a small indecision candle (the star), and a large bearish confirmation candle. Look for evening stars at resistance levels, confirm with volume and overbought indicators, and place stops above the star candle. This pattern often marks the beginning of significant downtrends.
Learn more reversal patterns in our morning star guide or explore dark cloud cover patterns.