The Evening Star mirrors the Morning Star but indicates a potential top. It begins with a strong bullish candle, followed by a small indecision candle, and ends with a bearish candle closing below the midpoint of the first bar.
The algorithm watches sequences of three candles. When the pattern forms, it enters short with a stop above the small middle candle's high. Positions exit once price drops beneath the confirmation candle's low or if the stop is triggered.
Since the setup anticipates a quick reversal from overbought conditions, trades typically aim for short, momentum-driven moves lower.
Entry Criteria: Three-candle Evening Star pattern.
Long/Short: Short only.
Exit Criteria: Price below confirmation bar low or stop-loss.
Stops: Yes, above middle candle high.
Default Values:
CandleType = 5 minute
StopLossPercent = 1
[*]Filters:
Category: Pattern
Direction: Short
Indicators: Candlestick
Stops: Yes
Complexity: Intermediate
Timeframe: Intraday
Seasonality: No
Neural networks: No
Divergence: No
Risk level: Medium