The ‘Evening Star’ or its variant ‘Evening Star Doji’ is a high credibility bearish reversal pattern that is made up of three candlesticks. The first is a big white candle that is followed by a small candlestick that could either be black or white as long as it gaps up. The third candlestick should be black closing well within the body of the initial big white candlestick of the pattern.
The ‘Evening Star (Doji)’ is actually a confirmed ‘Bearish (Doji) Star’, i.e. the first two candlesticks make up a ‘Bearish (Doji) Star’ and the black candle represents the needed confirmation. The name for the pattern is derived from the planet Venus the ‘Evening Star’ that appears in the evening sky after sunset.
Technical Description
1) The first white candlestick should have a big body and be preceded by a bullish market.
2) We see the second candlestick with a small body, its color is irrelevant.
3) There should be a body gap between the first candle and the second candlestick.
4) For the third candlestick it should be black and close well within the body of the first candle in the pattern.
Mark’s Perspective
An ‘Evening Star (Doji)’ is already a confirmed reversal pattern, i.e. the medium credibility ‘Bearish (Doji) Star’ and as such can be traded aggressively. We can take a short at market the moment the pattern is formed’ with stops placed above the patterns high. The greater that the black candlestick pushes into the body of the white candlestick the more significant the pattern becomes.