Chartered Market Technician (CMT) Practice Exam 2025 - Free CMT Practice Questions and Study Guide

A reversal pattern that occurs after an uptrend signals a change in the prevailing trend. The Evening Star is a well-recognized candlestick pattern that fits this description. It typically consists of three candles: a strong bullish candle, followed by a smaller body (which may be bullish or bearish), and then a bearish candle that closes below the midpoint of the first candle. This progression indicates a potential reversal of bullish sentiment, suggesting that the market is shifting from an uptrend to a downtrend.

While Dark Cloud Cover is also a bearish reversal pattern, it occurs over the course of two candlesticks, and it generally appears during an uptrend but has a slightly different structure than the Evening Star. The Common Gap and Exhaustion Gap do not inherently involve a specific candlestick formation that indicates reversal; rather, they are patterns related to price movement and volume, typically highlighting either consolidation or the potential end of a trend. Therefore, the Evening Star is recognized specifically for signaling a bearish reversal after an uptrend, making it the correct identification in this context.