Top reversal pattern: twilight star

The “star of dusk”, generally refers to the Venus that appears on the western horizon after sunset, symbolizing the end of day and the arrival of night.

In technical analysis, the Dusk Star pattern also has a similar meaning, which usually appears at the top of the market, suggesting that the trend may rise or fall.

This article will introduce a bearish reversal candlestick pattern - Twilight Star.

What is the Twilight Star?

The Evening Star is a bearish reversal candlestick pattern consisting of three candlesks, usually after an uptrend, which is the opposite of the Morning Star pattern.

The first K-line at dusk is the sun; the second K-line entity is small and jump high open, similar to a “Doji”; the third K-line is the big yin line, on the next direction of the situation play a key guide role.

The third candlestick is characterized by a 'low low', with a larger closing decline, suggesting that the trend may be upward or downward.

How was the star of the evening formed?

Dusk stars usually appear in an uptrend, which may form a potential top of the market at this time.

The first candlestick closing price is much higher than the opening price, highlighting a strong buying order in the market.

The second K-line jumped high, but the closing price was almost flat with the opening price, which was a preliminary sign of weakness as the long failed to “ride the chase” further.

The third K-line jump low open, and close sharply down, confirmed the long fatigue, and implied that the bearish ability to dominate the market, trend or soon ushered in a reversal.

How to identify a Twilight Star?

In actual combat, investors can pay attention to the following key points to better identify the Evening Star pattern.

• Uptrend

The first is to look for a period of uptrend on the K-line chart to find a potential top of the market.

• The first K-line

The first K-line of the Twilight Star should be the Taiyo line.

• Second K line

The second K-line solid is small and high jump, which can be either a positive or a yin line. Note that the highest price of the Evening Star pattern often appears on the second K-line, which looks like a “Doji”.

• Third K line

The third K-line should be the big yin line, characterized by a low jump, and the closing price is lower than the center of the first candlestick entity.

• Turnover

If the third candlestick is “put down”, it helps to confirm the market bearish.

case analysis

Below, we take Pepsi (PEP) on a daily chart that appears as an example of a star of twilight.

• Pepsi stock price was on an upward trend before the Twilight Star pattern.

• On the first day of the pattern, the stock price rose, closing with a big sun line.

• The next day, the stock price jumped high and further higher in the intraday. However, the long failed to hold the position, and as of closing, the share price fell close to the opening price, resulting in a physically small candlestick.

• On the third day, the stock price jumped low, and the closing price clearly fell below the central position of the first candlestick entity, declaring the final formation of the Evening Star pattern.

summed

The Evening Star is a bearish reversal candlestick pattern consisting of three candlestick, usually appearing at the top of a potential market.

The Twilight Star pattern helps long traders grasp potential closing opportunities and can also help short traders spot potential short selling opportunities.

In actual combat, candlestick patterns should be combined with other technical analysis tools to better assist trading decisions.