Chartered Market Technician (CMT) Practice Exam 2026 - Free CMT Practice Questions and Study Guide

The Evening Star pattern is a well-known bearish reversal pattern that appears at the end of a bullish trend. This three-candle formation indicates that the upward momentum is weakening and a price decline may follow.

The first candle in the pattern is a strong bullish candle that confirms the existing upward trend. The second candle is typically a small-bodied candle that closes higher, indicating indecision in the market. The third candle is a bearish candle that opens below the second candle’s close and shows significant downward movement, ideally closing well below the midpoint of the first candle.

While the Evening Star may not be relevant in scenarios such as market consolidation or near key support levels, its primary significance lies in its occurrence after a sustained bullish phase, suggesting that traders could prepare for a potential shift in market sentiment. Thus, identifying this pattern at the end of an uptrend provides valuable insight into possible future market behavior.