Patterns/ Three candles

Three candles 7 min read

Evening star

Three candles at the top of an advance: a strong rise, a small hesitation above it, then a fall that closes well back into the first. The morning star inverted, and the same demanding midpoint rule applies.

What the shape is

Three candles, in order:

  1. A long up candle — body most of the range, not a doji with wicks.
  2. A small-bodied candle above it. Colour does not matter; size does. This is the hesitation.
  3. A strong down candle closing well into the first candle's body, conventionally past its midpoint.

Read as a sequence it describes a handover: buyers in control, buyers out of material, sellers in control. Three separate periods have to cooperate, which makes it harder to form by accident than any single candle.

It is also the most frequently misidentified pattern on this list, for one reason: people do not check the midpoint. A third candle that gives back a third of the first is not an evening star.

When it means something

A handover, across three periodsIllustrative
The strong rise, the small candle hesitating above it, and a fall that closes well down inside the first body. The middle candle's high is never exceeded afterwards — which is what turns the shape into a boundary.

The middle candle is the part worth studying. It sits above the first candle's close, which means the advance was still intact when it formed. Nothing about it looked like a problem at the time. The pattern only exists in hindsight, after the third candle arrives — and that is honest to say rather than something to hide.

The same shape, meaning nothing

Three candles that satisfied the definitionIllustrative
Long rise, small hesitation, strong fall past the midpoint — every condition met. The advance then resumed and made new highs within a few periods. A three-candle pattern is harder to form, which makes it rarer; it does not make it right.

Telling them apart

  • Check the midpoint. Measure it rather than eyeballing it. Most candidates fail here.
  • Is the middle candle actually small? If all three are similar sizes there was no hesitation, just three volatile periods.
  • Did the middle candle's high hold? That high is the pattern's ceiling and its failure point — a specific, checkable price.
  • How extended was the advance? The first evening star of a move is usually a pullback. One that appears after a long run, at a level, is a different proposition.
Worth sitting with

Both charts above meet the full definition, midpoint rule included. If a three-candle pattern — the most demanding on this site — can be satisfied exactly in a chart that turns and in a chart that does not, then no amount of extra conditions on the shape will fix the underlying problem. The information is in the context, and the context is not part of any pattern's definition.

The honest summary

The strongest of the common bearish patterns and still not a forecast. What it genuinely gives you is a defined failure point — the middle candle's high — and a reason to stop assuming the advance continues. Those are worth having. A prediction is not on offer.

Terms used

Evening star
A long up candle, a small hesitation above it, then a down candle closing into the first.
Morning star
The same sequence inverted, at the bottom of a decline.
Midpoint rule
The third candle must close past the middle of the first candle's body.
Handover
Control of a market passing from one side to the other across several periods.

Patterns are the easy half

Reading the chart underneath them is the part that decides whether any of this is useful. The Charts track works through levels, volume, trend and timeframes from the beginning.

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