Discover the secrets behind the Evening Star pattern, a powerful bearish reversal indicator in technical analysis. This three-candle formation signals a shift from bullish to bearish momentum, offering traders high-confidence short entry points to capitalize on market shifts.
What Is an Evening Star Candlestick Pattern?
The evening star is a three-candle bearish reversal that tends to show up late in an uptrend. It’s basically the market telling you the buyers are running out of gas and a downside leg is becoming more likely.
Candlestick patterns originated from Japanese rice trading in the 18th century. The evening star is one of the classics from that playbook, and it still shows up cleanly on stocks, forex pairs, and crypto charts.
What you’re watching is a shift in control. Candle one is strong bullish continuation. Candle two is the “stall” (often a doji or spinning top) that prints above the first candle and shows hesitation.
Then candle three is the punch: a solid bearish candle that closes deep into the first candle’s body, ideally on rising volume, which is the part that says sellers are actually stepping in—not just a random pause.
So the story is simple: buyers push, then they hesitate, then sellers take the wheel. When it’s real, that change in sentiment often shows up fast in price action.
What Are the Key Characteristics of the Evening Star?
Three-candle formation that appears after a sustained uptrend
Used as a sell/exit signal or a short setup trigger
Shows momentum flipping from bullish to bearish
Third candle volume helps confirm the shift
Works best when it forms at a meaningful level, not mid-range noise
Historical testing often puts the pattern around a ~72% hit rate depending on the market and filters. The big edge is that it’s easy to spot and gives you obvious places to define risk, which is why day traders and swing traders use it for exits and short ideas across equities, FX, and crypto.
How Do You Trade the Evening Star Pattern?
Spotting the pattern is easy. Making money with it is about execution: where you enter, where you’re wrong, and whether the chart context supports the short.
Where to Enter an Evening Star Trade
Approach | Entry Point | Stop-Loss Placement | Risk Level |
|---|---|---|---|
Aggressive | Close of third candle | Above second candle high | Higher |
Conservative | Break below third candle low | Above pattern high | Lower |
Aggressive Entry Approach
You short on the close of the third candle. You’ll get a better price if it dumps right away, but you’re accepting less confirmation.
That means position sizing and a hard stop matter more, because a quick squeeze back above the pattern can tag you out fast.
Conservative Entry Approach
You wait for price to break the third candle low. That extra filter cuts down the “looks good, then rips higher” failures.
The trade-off is you might miss the first part of the move, but you’re usually getting a cleaner trigger.
How to Set Stop-Loss and Take-Profit for Evening Star
Stops usually go above the pattern high or above the second candle high. That’s the area that should not break if the reversal is legit, so it’s a logical “I’m wrong” line.
Targets are chart-driven. Prior swing lows and clean support shelves are the first places to pay yourself.
If you like measured tools, Fibonacci retracements (38.2%, 50%, 61.8% of the prior up move) are common zones to scale out or tighten stops.
Essential Risk Management Components
Keep at least a 1:2 risk-reward on the plan before you click
Risk 1–2% of account equity per trade (or less in high volatility)
Size the position from the stop distance, not from “how good it looks”
Factor in volatility (ATR, recent ranges) so the stop isn’t sitting in noise
Be aware of scheduled catalysts (CPI, FOMC, earnings) that can invalidate the setup
Volume Validation
Volume is a big deal on the third candle. Rising volume on the breakdown says sellers are committed. If the third candle is red but volume is dead, it’s often just profit-taking and the uptrend can resume.
When in doubt, pass and wait for a cleaner one.
How to Confirm an Evening Star and Avoid False Signals
Evening stars can and do fail, especially in sideways markets or strong bull trends. Confirmation is what keeps you out of the worst fakeouts.
Best Indicators to Confirm an Evening Star Pattern
These are the common add-ons traders use to validate the reversal:
RSI Divergence: Price pushes to a higher high while RSI prints a lower high. That mismatch is often the first warning the rally is weakening.
MACD Crossover: MACD crosses below the signal line and the histogram flips negative. It’s not magic, but it lines up well with momentum rolling over.
Moving Average Breaks: A close below the 50-day or 200-day moving average adds weight because it shows the market is losing its trend support.
Trendline Violations: If the evening star forms and then price snaps an ascending trendline, it usually improves follow-through.
Best Timeframes and Market Context for Evening Star
Daily and weekly evening stars tend to behave better. On 5-minute or 15-minute charts, you’ll see plenty of “evening stars” that are just random rotation because intraday flow is noisy.
The best ones form after a real uptrend and into real resistance: prior swing highs, round numbers like 1.2000 on EUR/USD, or a Fibonacci zone the market has respected before.
If it prints in the middle of a range, it’s usually a coin flip.
When the Evening Star Pattern Fails: Common Fakeouts
Watch for the usual red flags: low volume on candle three, a weak third candle that barely breaks anything, no meaningful gaps (when gaps are expected), bullish moving average structure still accelerating, or the whole pattern forming inside a choppy sideways box. Those conditions usually mean there’s no real shift in control.
Stacking confirmation factors is how you cut the junk trades. Using technical indicators alongside proper context and timeframe selection is a solid baseline.
What really helps is tracking your own stats—what confirmations work for your style, your market, and your holding time.
How Does the Evening Star Pattern Form?
The pattern is only useful if the three candles are doing the right job. You want a clear uptrend, a clear stall, and then a clear breakdown.
If any piece is weak, you’re usually looking at chop, not a reversal.
First Candle: Bullish Momentum Before the Reversal
Candle one should be a strong green candle with a decent body and relatively small wicks. It closes near the high, showing buyers are still in control.
If the first candle is tiny or messy, the setup loses context because there’s no “momentum to exhaust.”
Second Candle: The “Star” Indecision Candle
The middle candle is the star: small body, often a doji or spinning top. It typically prints above the first candle’s close, which shows buyers tried to keep the rally going.
But the lack of follow-through is the tell—demand is fading and supply is starting to show up.
Third Candle: Bearish Confirmation and Breakdown
The third candle is where you want commitment. A strong red candle that closes well below the midpoint of the first candle is the common benchmark.
If volume expands here, even better, because it confirms the selling isn’t just a quick flush.
Component | Candle Type | Significance |
|---|---|---|
First | Large Bullish | Confirms strong uptrend momentum |
Second | Doji/Spinning Top | Shows stalling and indecision |
Third | Strong Bearish | Confirms sellers taking control |
Gap formations between candles enhance pattern reliability because they make the transition more obvious: push up, stall, then drop. When it’s clean, it’s a high-probability “take profits or look for shorts” type of setup.
How to Improve Evening Star Pattern Accuracy
An evening star by itself is just information. The money setups are the ones with confluence—good trend context, good level, good candle quality, and a market that actually has room to drop.
What Makes an Evening Star More Reliable?
The stronger the uptrend into the pattern, the more meaningful the reversal. A grind higher with weak structure doesn’t create the same “exhaustion” as a clean, sustained push.
Location matters just as much. If it forms at a well-tested resistance zone, a prior swing high, or a Fibonacci level the market has reacted to before, it carries more weight.
Random prints in the middle of nowhere don’t.
Key reliability enhancers include:
Clear gaps/spacing between candles (where applicable)
High volume on the third candle
Confluence with other candlestick signals (bearish engulfing nearby, long upper wicks, etc.)
Formation at proven resistance
Multi-timeframe alignment (daily pattern lining up with weekly resistance)
Best Chart Patterns to Combine With Evening Star
It hits harder when it shows up with structure: a double top, a head and shoulders, the top of a rising channel, or the upper boundary of an ascending triangle. Those are the spots where trapped longs tend to fuel the selloff.
What to Learn From Failed Evening Star Setups
Failures are useful data. Strong bull trends can ignore reversal candles and keep grinding higher, especially if the broader market is risk-on.
If you journal the losers, you’ll usually see the same issues repeating: wrong location, weak confirmation, or trading it against a bigger timeframe trend.
Patience is the edge here. Waiting for high-quality setups with multiple confirmation factors beats taking every “almost” evening star you see.
Evening Star Pattern Checklist for Better Trades
The evening star is a clean way to spot trend exhaustion and a potential handoff from buyers to sellers. Used properly, it helps you protect profits near highs and time shorts when the chart is actually setting up for downside.
Evening Star Trading Checklist: What Matters Most
All three candles are clean and in the right place (after an uptrend, not inside chop)
Volume and momentum tools back up the reversal idea
It forms into a real resistance level (swing high, round number, Fib zone)
Your stop is logical and your size is built around that stop
You treat it as part of the full chart story, not a standalone “sell button”
How to Get Better at Trading the Evening Star Pattern
Screen old charts and mark every evening star you can find, then log what happened after: follow-through, chop, or failure. Backtest your entry/stop rules, and keep notes on the market regime (trend strength, volatility, catalysts).
That’s how you turn a pattern from “something you recognize” into something you can trade with confidence.
Where Your Real Edge Comes From
The edge isn’t the pattern—it’s the combination of pattern quality, confirmation, and risk control. When those line up, the evening star can be a reliable signal for exits and short opportunities across stocks, forex, and crypto.
How Does the Evening Star Work in Stocks, Forex, and Crypto?
The pattern works across markets, but the “rules of the road” change depending on what you trade. Liquidity, session structure, and volatility all affect follow-through.
Evening Star Pattern in Stock Trading
In stocks, evening stars are strongest into major resistance or after a sharp earnings-driven rally. Gaps matter more here because equities gap all the time.
A clean gap up into the star and then a gap down into the sell candle is a stronger “distribution” look than three candles glued together.
Evening Star Pattern in Forex Trading
FX trades 24/5, so you’ll see fewer true gaps on spot charts. Evening stars still show up around psychological levels and pivot zones where size sits (think EUR/USD around 1.1000 or USD/JPY around 150.00).
Since centralized volume isn’t really a thing in spot FX, traders often use tick volume or look at CME currency futures volume as a proxy.
Evening Star Pattern in Crypto and Other Markets
Crypto can make the pattern look exaggerated because volatility is higher. That can be good if the breakdown candle comes with heavy volume, but it also means stops need more room and position size needs to come down.
Commodities and indices can also respect the pattern well, especially around macro-driven resistance levels.
Some backtests suggest mean reversion can beat straight shorts in certain stock and crypto environments. In practice, that means sometimes the better trade is waiting to see if the pattern fails and then buying the reclaim, or buying a pullback into support instead of forcing a short.
On the other hand, forex markets often respond better to the more traditional “pattern completes, then sell” approach.
How Do You Turn Evening Star Setups Into Repeatable Results?
The evening star is most useful when you treat it as a hypothesis to test, not a guaranteed reversal. The article’s themes—context, confirmation, and risk control—are all measurable, which is where a trading journal becomes practical. After each setup, log the timeframe, trend strength, whether volume expanded on the third candle, and which confirmation tools (RSI divergence, MACD crossover, moving average breaks, trendline violations) were present. Then track outcomes like MFE/MAE, R-multiples, and whether your stop placement (above the pattern high vs. above candle two) changed expectancy.
Over a meaningful sample, you can see which versions of the pattern actually pay in your market and which are just “mid-range noise.” Using a dedicated tracker helps you review trades consistently and spot process errors early; for example, recording trades in a Rizetrade trading journal dashboard for performance analytics, PnL metrics, and pattern-based insights keeps the focus on decision-making quality rather than one-off results.