The real body of candle 1 and candle 2, should not overlap each other. The third candle opens gap down and is a long bearish candle. Again the real body of the second and third candle should not overlap.

• The exact opposite of the same is a morning star pattern.
• The Evening Star pattern is a triple candlestick pattern that usually occurs at market tops and the Morning Star pattern is a triple candlestick pattern that occurs at market bottoms.
• If the third candlestick opens below the actual star, leaving a space between the actual star and the third candlestick, the evening star’s accuracy is improved.
• Candle stick chart is highly recognised in current technology oriented trading and also volatile markets.

Trading in the stock market and in other securities entails varying degrees of risk, and can result in loss of capital. Readers seeking to engage in trading and/or investing should seek out extensive education on the topic and help of professionals. Instead of a spinning top, if you get the 2nd candle as a doji, then the pattern will be called as evening star doji candlestick pattern. Evening star doji is the second most bearish top pattern next to the abandoned baby or island top formation. The information on the zoompro.in website and inside our Trading Room platform is intended for educational purposes and is not to be construed as investment advice.

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But it must be mentioned that there is no ‘Holy Grail’ in technical analysis. Here, in this chart of COAL INDIA stock, this formation was found. Here an ideal Evening star formation has taken place in the chart.

The second candle leaves a gap with the previous large candle. This candle opens with a gap-up price and maintains the gap during close. Analysts and traders have found that they occur under specific market conditions. The interpretations of market situations tell us that there is a high probability of stock prices behaving in a specific way. The continuation of a trend grows firmer when the counter or index witnesses gaps. In morning star, one can see a gap up close and in Evening Star a gap down close.

The evening star candlestick pattern is a three-candlestick formation that can signal the reversal of a current uptrend. The first step to identifying this pattern is to look for a long green/bullish candle. This is followed by a small red/bearish candle, and then finally, a long red/bearish candle. While this pattern can be found across all timeframes, it is most commonly seen on longer timeframes such as the daily chart. When interpreted correctly, this formation can be an extremely useful tool for traders in predicting market reversals. The evening star candlestick pattern is a three-candlestick formation that is used to signal the reversal of a current uptrend.

Trade Setup – Evening Star Pattern

A candle and two wicks are included in each candlestick. The difference between the highest and lowest price during that trading day determines the candle’s length. A long candle denotes a significant price move, whereas a short candle denotes a minor one. How to trade using Evening Star Candlestick PatternThe entry can be placed at the open of the next candle after the morning star pattern has developed.

The price goes down fast indicating the bears are also strong. Later the bears gather strength and bring the price down near the opening price. If the candle closes below the https://1investing.in/ opening price, it turns red or if closes above the opening price, the candle turns green. This diagram above shows how the evening star looks in the candlestick chart.

For example, once you learn to drive a car, it doesn’t matter which car you drive. Driving a Honda car is similar to driving a Hyundai or a Ford car. Once the car is driven, driving happens naturally no matter what car you’re driving.

Dark Cloud Cover Candlestick Pattern

The evening star candlestick pattern is most likely to be controlled by bulls which begin to lose the steam. Candlestick patterns are used by technical analysts to predict future price reversals to the up or down side. One of such candlestick patterns which signal the end of an uptrend is “Evening Star Candlestick Pattern”.

Entry levels, targets and stop loss can be clearly recognised when taking a look at the chart below. Furthermore, you can choose to sell when the price goes above the stop-loss price or Y. Top10stockbroker.com & Indianfranchisereview.com are websites under Medmonx Enterprises Private Limited. We are certified stock broker review & comparison website working with multiple partners. A considerable change is the price is depicted by a long candle while a small change in price is indicated by a short candle. But if you are new to the market, then you need to know one thing for sure that to interpret these patterns, you need to have some excellent skills and also have an eye for details.

You must first complete an ASBA application and supply necessary KYC information. Following the allocation of shares, your funds will be frozen, and the invested amount will be deducted. For instance, only 1 lakh would be deducted from your bank account if you invested 3 lakhs and received shares worth 1 lakh. Candle stick chart is highly recognised in current technology oriented trading and also volatile markets.

Zoompro is World’s Best Forex Signal Provider, You need tested strategies, powerful tools, and experienced traders to arm you with knowledge. Keeping your wins big and losses small is the only way you stay in the game. Zoompro team is dedicated to ensuring consistent profitability for its clients.

Morning Star is a bullish pattern that occurs at the lower end of the trend. The stoploss for this trade will be the lowest low of the pattern. The P3 uptrend is expected to continue over the next few trading sessions and hence importance of law of diminishing marginal utility the market should look for buying opportunities. The formation of a Doji/Spinning Top creates a bit of restlessness within the bears, as they were expecting another bearish day, especially after the gap-down opening.

Evening Star Example in Real Market

This pattern is only valid when formed at an uptrend or at a possible support. This pattern is just opposite of Morning Star Candlestick Pattern. This pattern is also a three day pattern or formed by three continuous candlestick of following characteristic. A good sign that a downhill trend has started is the evening star pattern. However, it can be challenging to make out in the shuffle of stock-price data.

Risk aversion – The risk-averse trader will initiate the trade after seeing the next day’s candle of the pattern. The candle color should be blue for long trades and red for short trades. On the second day of the pattern , the market gap opens which reaffirms the bulls trend in the market.

The working of Evening Star Candlestick Formation

The presence of a small candle in this pattern indicates that gloomy days are ahead. Similar to the star burning in the evening sky, this small star or Doji-like pattern is unmistakable in the chart. This shape and combination of this pattern have given it high visibility in the chart. It also indicates that sunny days are going away and the market is going to pass through a dark or gloomy period. Like if this pattern is formed at the top of a downtrend together with oversold condition then it further strengthen strong sell signal. If it is formed in an downtrend or in a sideways marketit is of little significance.