What is an evening doji star?
A three-day bearish reversal pattern that is similar to the evening star. The uptrend continues with a large white body. The next day opens higher, trades in a small range, then it closes at its open (doji). The doji shows the uncertainty on the market. The following day the rate of the stock starts to fall and closes below the midpoint of the body of the first day. The forming black candle strengthens the reversal.
What happens on the market when an evening doji star appears?
After days of uptrend, the rate opens well above the closing price of the previous day. During the day it reaches its peak that is usually a resistance point. There sellers prevail and rate falls back to the level of the opening position. Traders then pay attention to the descent on the previous day and sellers start to dominate again. The day ends with a reasonable fall in the stock’s rate.
Presence of the evening doji star
As most of the group patterns of Japanese candlesticks, evening doji star can be observed at stocks. It hardly appears on forex markets.
Counter part of this pattern in a candle chart is morning doji star.