Direct answer
A worked example of Evening Star is a fully specified scenario where you assign hypothetical candle values (open, high, low, close) for three candles, then check whether the pattern’s conditions are met. You can do this without real-time prices by using fixed numbers and stating every assumption.
Mechanism and definition (what you check)
An Evening Star is typically described as a bearish reversal pattern that uses three candles:
- A strong move up first (the “prior trend”).
- A small-bodied candle second that often signals indecision.
- A bearish candle third that closes lower and suggests the move up may be losing strength.
Because pattern descriptions vary slightly between charting conventions, a “worked example” must define the exact checks you will apply. For this example, use the following assumptions (chosen to make verification straightforward):
- Candle values are given as Open (O), High (H), Low (L), Close (C).
- Candle 1 is “bullish and strong” if C1.C > C1.O and the body size is at least 8 points.
- Candle 2 is “small-bodied” if |C2.C − C2.O| ≤ 3 points.
- Candle 3 is “bearish” if C3.C < C3.O.
- “Third candle shows reversal” if C3.C is at most the midpoint of Candle 1’s body.
- “Prior trend exists” is assumed because Candle 1 is part of an earlier rise; in a self-contained example, we treat that context as given.
Worked numerical example (scenario you can verify)
Assume price is in generic units (not a real instrument). Consider three consecutive candles:
Candle 1 (prior strength)
- O1 = 100, C1 = 112, H1 = 113, L1 = 99
- Body = 112 − 100 = 12 points (meets the ≥ 8-point requirement)
Candle 2 (indecision)
- O2 = 112, C2 = 111, H2 = 114, L2 = 108
- Body = |111 − 112| = 1 point (meets the ≤ 3-point requirement)
Candle 3 (bearish confirmation)
- O3 = 112, C3 = 105, H3 = 112, L3 = 104
- Candle 3 is bearish because 105 < 112.
- Candle 1 body midpoint = (O1 + C1) / 2 = (100 + 112) / 2 = 106.
- Confirmation check: C3.C = 105, and 105 ≤ 106, so it passes.
Decision using the stated rules:
- Candle 1 is bullish and strong ✅
- Candle 2 is small-bodied ✅
- Candle 3 is bearish ✅
- Candle 3 close is at or below Candle 1 midpoint ✅
Therefore, under these explicit assumptions, this three-candle sequence qualifies as an Evening Star.
Limitations and risks (failure modes you should expect)
A worked example can still fail as a real-world guide because several factors are variable:
- Pattern-definition mismatch: Different chart conventions may use different body size thresholds, whether gaps are required, or what “confirmation” means. If your checks differ, your classification can change.
- Ambiguous closes: If Candle 3 closes only slightly below a reference level (like a midpoint), the “reversal” meaning is less clear.
- Weak prior context: The “prior trend exists” assumption must come from surrounding candles. If the broader context is not actually a rise, the same three candles may not behave like a reversal.
- Market microstructure and costs: Even if the pattern is identified, execution, spreads, commissions, and slippage can alter outcomes. A historical pattern appearance does not determine future price movement.
Verification and next question to ask
To independently verify an Evening Star using a worked example, you should:
- Write down the exact rules you will use.
- List each candle’s O, H, L, C.
- Compute any thresholds (like body sizes and midpoints) from the numbers you were given.
- Confirm the pattern only when every check passes.
Next, compare how your chosen rules align with common explanations of Evening Star and test at least one counter-scenario (where Candle 3 closes higher or Candle 2’s body is not small).