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Written and copyright © 2008-2010 by Thomas N. Bulkowski. All rights reserved.
In my book,
Encyclopedia of Candlestick Charts  , pictured on the right,
I explore the entire range of candlestick patterns from abandoned babies to windows (not exactly A to Z, but you get the idea), in both bull and bear markets, using almost 5 million candle lines
in the tests.
The book takes an in-depth look at 103 candlestick patterns and reports on behavior and rank (3 types: reversal rate, frequency, and overall performance), identification guidelines,
performance statistics (tables of general statistics, height, and volume), trading tactics (tables of statistics on reversal rates and performance indicators),
and wraps each chapter with a sample trade. I share a sliver of that information below. If you like what you read here, then you will love the book. Help support this website and buy a copy
by clicking on the above link.
The evening star is cousin to the evening doji star, but I’ll guess you already knew that. The difference is in the star, which is the middle
candle of the three candle pattern. The evening star sounds like the name of a newspaper, doesn’t it?
The evening star acts as a bearish reversal of the upward price trend, and when the breakout occurs, hold on for dear life. The overall performance rank is very high, but most of the
performance is due to upward breakouts, not downward ones. In fact, you will want to avoid trading the evening star after a downward breakout in a bull market
Important Results
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Theoretical performance: Bearish reversal
Tested performance: Bearish reversal 72% of the time
Frequency rank: 71
Overall performance rank: 4
Best percentage meeting price target: 50% (bull market, up breakout)
Best average move in 10 days: 8.77% (bear market, up breakout)
Best 10-day performance rank: 4 (bear market, up breakout)
All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.
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 Evening Star
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Discussion
The evening star candlestick acts in theory as it does in reality, as a bearish reversal of the upward price trend 72% of the time. That gives it a rank of 10th, which is high. However,
with a 71 frequency rank, it may be a long time before you see one in the bush. The overall performance rank is 4th, and that is top notch. Once the trend begins, it tends to remain
trending.
The best average move is a rise of 8.77% in a bear market, ranking 4th. My guess is that the 63 samples composing the rise is too few to justify having faith in it. Look for the number to drop
as more samples become available.
Identification Guidelines
| Characteristic | Discussion |
| Number of candle lines | Three. |
| Price trend leading to the pattern | Upward. |
| Configuration | Look for a tall white candle in an upward price trend. Following that, a small bodied candle of any color should gap above the bodies of the two adjacent candles
(ignore the shadows). The last day is a tall black candle that opens below the prior candle, and closes at least midway down the body of the first day. |
Three Trading Tidbits
If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book
where the tips appear.
- Evening star candles that appear within a third of the yearly low in a bull market perform best -- page 338.
- Trade the evening star candlestick when it appears in an upward retracement of the primary downtrend -- page 340.
- The evening star candlestick breaks out downward most often -- page 341.
Example
This evening star candlestick appears in an upward price trend. It sports a tall white candle on the first day followed by a smaller candle that is black but can be white, red
or any color of your choice, just as long as the body remains above the surrounding two candles. On the last day a tall black candle appears that gaps below the middle candle and closes
at least midway down the first candle (the tall white one).
This evening star candlestick acts as a bearish reversal of the up trend since the breakout is downward. A downward breakout occurs when price closes below the bottom of the
candlestick pattern. In this example, the new downtrend is a lasting one, but it takes its time trending lower.
It is difficult to say from the chart, but this could be an example of the evening star appearing as part of an upward retracement of the primary downward price trend. That means
price is moving lower over the longer term then price retraces -- moves up -- before the evening star appears and sends price tumbling again, to rejoin the original downward move. Finding
those situations represents a delicious trading setup.
-- Thomas Bulkowski
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