CDLEVENINGSTAR (CDLEVENINGSTAR)

CDLEVENINGSTAR (Evening Star) is a three-candle bearish reversal pattern appearing at uptrend tops. First candle is a long bullish candle continuing the uptrend. Second candle is a small-bodied candle (can be bullish or bearish) that gaps up above the first candle, showing weakening momentum despite the gap. Third candle is a bearish candle that closes well down into the first candle's body, confirming the reversal. The penetration parameter (default 0.3 or 30%) determines how deep the third candle must close into the first candle. The small second candle (the 'star') gaps up showing initial strength but reveals indecision/weakening, followed by bearish confirmation. The opposite of Morning Star pattern.

Evening Star is one of the most powerful and reliable bearish reversal patterns in technical analysis, extensively used in cryptocurrency trading to identify trend tops and short entry points. The pattern shows an uptrend that gaps higher but loses momentum (small star candle), followed by bearish takeover. Enter short positions when the third candle closes, particularly if it penetrates >30% into the first candle (some traders prefer >50% for higher probability). Conservative approach: wait for next candle to close below the pattern for confirmation. Most effective at resistance levels, after extended rallies, round-number psychological levels, or following parabolic price action. Strengthening factors: larger gap between candles, smaller star body showing more indecision, deeper third-candle penetration (>50%), high volume on third candle, RSI overbought (>70-75), MACD showing bearish divergence or crossover. This pattern is foundational in candlestick analysis and universally recognized by crypto traders.