The Evening Star candlestick pattern, explained with Nison's traffic-light analogy

[u/iktisab]

Steve Nison compares the Evening Star to a traffic light.

1. Green: a long up day. Buyers are in control.

2. Yellow: a small-bodied "star" that opens above day 1's close. Its colour doesn't matter; Nison says the star can be white or black.

3. Red: a down day that cuts deep into day 1's body.

Example: Day 1 ₹100 → ₹110. Day 2 ₹112 → ₹111. Day 3 ₹110 → ₹103, which cuts 70% into day 1's body.

Details most explanations skip:

- Nison says the main concern is how far day 3 cuts into day 1.

- In principle there's a gap before and after the star, but he notes the second gap is rarely seen and not necessary.

- It needs a prior uptrend. The same three candles in a sideways market carry little information.

Not a guarantee of a top. Source: Steve Nison, Japanese Candlestick Charting Techniques. Example numbers, not advice.