Evening Star

The Evening Star is a candlestick patterns indicator used in Skyrexio Strategy Builder for pattern recognition and reversal/continuation signals.

Introduction

The Evening Star is a bearish reversal candlestick pattern that signals potential SHORT opportunities or LONG position exits. This three-candle pattern consists of a large bullish candle, a small-bodied candle (star), and a large bearish candle, indicating a clear transition from buying pressure to selling pressure.

How Evening Star Works

Evening Star is a three-candle bearish reversal pattern with specific characteristics:

• Three-candle sequence - Large bullish candle, small star candle, large bearish candle • Gap up requirement - Star candle gaps up from the first candle • Body penetration - Third candle closes well into the first candle's body • Volume confirmation - Increasing volume on the third candle strengthens the signal • Context matters - Most effective at resistance levels or after extended uptrends

Pattern Psychology: The pattern shows a three-stage evolution: 1) Bulls dominate (first candle), 2) Market indecision emerges (star), 3) Bears take complete control (third candle). This progression demonstrates a clear shift in market sentiment from bullish to bearish.

Key Characteristics

Attribute	Details
Category	Candlestick Patterns
Type	Bearish Reversal Signal
Primary Use	SHORT entries, LONG exits
Timeframe	All timeframes supported (1m to 1M)
Confirmation	Volume, resistance levels, trend context

Strategy Applications

🔴 SHORT STRATEGY (Primary Use)

Evening Star is primarily a SHORT signal - enter short positions when the pattern completes.

Base Entry Order (SHORT)

Base Order Condition: Evening Star Pattern Detected
First Condition: Evening Star
Timeframe: 1H

Additional Confirmation:
First Condition: Volume
Timeframe: 1H  
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Additional Entry Orders (SHORT)

Additional Entry 1: Pattern confirmation with momentum
First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 65

OR

Additional Entry 2: Breakdown below star low
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1H

Take Profit Orders (SHORT)

Rule 1: Exit condition - Target reached at support level
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1H

OR

Rule 2: Exit condition - Oversold momentum warning
First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 22

OR

Rule 3: Exit condition - Bullish reversal pattern detected
First Condition: Morning Star
Timeframe: 1H

Stop Loss Orders (SHORT)

Rule 1: Stop loss - Pattern invalidated (price above star high)
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: High Price
Timeframe: 1H

OR

Rule 2: Stop loss - Volume surge breaks bearish momentum
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

OR

Rule 3: Stop loss - Bullish momentum confirmed
First Condition: MACD Line
Timeframe: 1H
Operator: Cross Above
Second Condition: MACD Signal Line
Timeframe: 1H

🟢 LONG STRATEGY (Secondary Use)

Evening Star can be used in LONG strategies as an exit signal or contra-trend bounce entry in extremely oversold conditions.

Counter-Trend Risk: Using Evening Star for LONG entries is high-risk and should only be considered in extreme oversold conditions with very tight risk management.

Base Entry Order (LONG) - Contra-trend bounce

Base Order Condition: Evening Star in oversold market
First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 20

AND

First Condition: Evening Star
Timeframe: 1H

Additional Entry Orders (LONG) - Not recommended

Additional entries not recommended for LONG strategy using Evening Star. Use other bullish indicators like:

• Morning Star

• Bullish Engulfing

• Hammer

• Bullish divergence indicators

Take Profit Orders (LONG) - Exit existing positions

Rule 1: Exit condition - Evening Star signals trend reversal
First Condition: Evening Star
Timeframe: 1H

OR

Rule 2: Exit condition - Resistance level reached
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: High Price
Timeframe: 1H

OR

Rule 3: Exit condition - Overbought momentum exhaustion
First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 80

Stop Loss Orders (LONG) - Protect existing positions

Rule 1: Stop loss - Evening Star confirms downtrend
First Condition: Evening Star
Timeframe: 1H

OR

Rule 2: Stop loss - Support breakdown confirmed
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1H

OR

Rule 3: Stop loss - Volume confirms breakdown
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Advanced Strategy Combinations

Multi-Timeframe Evening Star (SHORT)

Setup

Higher Timeframe Confirmation:

• Daily: Evening Star + RSI > 65

• 4H: Trend reversing (EMA(21) turning down)

• 1H: Evening Star execution + Volume confirmation

Execution

Entry: 1H Evening Star completion Target: Previous swing low Stop: Above star candle high

Resistance Level Rejection (SHORT)

Setup Process:

1. Price approaches key resistance level

2. Evening Star forms at resistance

3. Volume increases on third candle

4. RSI shows bearish divergence

Execution:

• Base Order: Evening Star at resistance

• Additional: Price confirms resistance hold

• Take Profit: Support levels, oversold conditions

• Stop Loss: Break above resistance with volume

Risk Management Guidelines

Position Sizing

Strategy Type	Position Size	Conditions
SHORT Strategy	Standard	Pattern appears at resistance
LONG Strategy	Reduced (25-50%)	Counter-trend plays only
High Volume	Increase confidence	Can use larger size
Low Volume	Reduce size	Wait for confirmation

Pattern Reliability Factors

High Reliability

✅ Appears at established resistance levels ✅ High volume on third candle ✅ Follows extended uptrend ✅ Clear gap between candles ✅ Strong third candle penetration

Low Reliability

❌ Appears in middle of range ❌ Low volume confirmation ❌ Counter to major trend ❌ Weak third candle ❌ No clear gaps

Best Practices

For SHORT Strategies

1. Wait for completion - Enter only after third candle closes

2. Volume confirmation - Ensure increasing volume on third candle

3. Resistance context - Most effective at key resistance levels

4. Gap requirement - Stronger signals when star gaps up

For LONG Strategies

1. Extreme oversold only - Only consider in deeply oversold conditions

2. Counter-trend risk - Use smaller position sizes

3. Quick profits - Take profits fast on any rally

4. Tight stops - Use very tight stop losses

Common Mistakes to Avoid

• Early entry - Don't enter before third candle completes

• No context - Ignoring support/resistance levels and trend direction

• Volume ignored - Trading pattern without volume confirmation

• Wrong direction - Don't go LONG on Evening Star without extreme conditions

Market Conditions Analysis

Market Type	SHORT Strategy Effectiveness	LONG Strategy Effectiveness
Uptrend	🟢 High (reversal signal)	🔴 Very Low (against trend)
Downtrend	🟡 Medium (continuation)	🔴 Low (counter-trend)
Ranging	🟢 High (at resistance)	🟡 Medium (at support only)
High Volatility	🟢 High (clear signals)	🔴 Low (whipsaws)
Low Volume	🔴 Low (wait for confirmation)	🔴 Very Low (avoid)

Related Patterns

Pattern	Relationship	Link
Morning Star	Opposite signal	Morning Star
Bearish Engulfing	Similar bearish signal	Bearish Engulfing
Hanging Man	Single-candle bearish	Hanging Man
Dark Cloud Cover	Two-candle bearish	Dark Cloud Cover

Conclusion

Evening Star is primarily a SHORT signal indicating potential downward price movement. As one of the most reliable three-candle reversal patterns, it provides clear entry signals and profit targets while identifying major trend changes from bullish to bearish.

Key Takeaways

• PRIMARY USE: SHORT entries at resistance levels

• SECONDARY USE: LONG exits when holding positions

• TERTIARY USE: Counter-trend LONG entries (high risk, oversold only)

• ALWAYS: Wait for pattern completion and confirm with Volume

Success with Evening Star requires patience to wait for pattern completion and understanding its bearish nature. The three-candle progression provides clear insight into market sentiment shifts, making it one of the most trusted reversal patterns in technical analysis.

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