Definition: Get the highest rated stock from Americanbulls for this pattern >>>
This is a major top reversal pattern formed by three
candlesticks. The first candlestick is a long white
body; the second one is a small real body that may be
white. It is characteristically marked with a gap in
higher direction thus forming a star. In fact, the first
two candlesticks form a basic star pattern. Finally
we see the black candlestick with a closing price well
within first session’s white real body. This pattern
clearly shows that the market now turned bearish.
Recognition Criteria:
1. Market is characterized by uptrend.
2. We see a long white candlestick in the first day.
3. Then we see a small candlestick on the second day
with a gap in the direction of the previous uptrend.
4. Finally we see a black candlestick on the third day.
Explanation:
The market is already in an uptrend when the white
body appears which further suggests the bullish nature
of the market. Then a small body appears showing the
diminishing capacity of the longs. The strong black
real body of the third day is a proof that the bears
have taken over. An ideal Bearish Evening Star Pattern
has a gap before and after the middle real body. The
second gap is rare, but lack of it does not take away
from the power of this formation.
Important Factors:
The stars may be more than one, two or even three.
The color of the star and its gaps are not
important.
