For today's chart we've identified an intriguing candlestick pattern known as an evening star. This pattern is often used by traders to predict a change in the direction of the trend. As shown from the zoomed-in section on the chart, the pattern is created by finding a series of three candlesticks with the following characteristics:

1. The first bar is a large green bar (up day) located in an uptrend.
2. The middle bar is a small-bodied candle (up or down) that closes above the previous bar
3. The last Bar is a large red bar (down day) that opens below the middle candle and closes near the center of the first bar.

As you can see from the chart below, this pattern has formed as the stock is about to test the resistance of a descending trendline. The combination of these two technical signals suggests that we may see a move lower.



You May Also Like

Related Analysis
  1. Stock Analysis

    New Earnings Season Kicks Off: Alcoa, PepsiCo, Walgreens

  2. Stock Analysis

    Celgene's $1 Billion Deal to Fight Cancer

  3. Stock Analysis

    The Fall of the Chinese Stock Exchange and its Impact on Alibaba, Youku Tudou, and ...

  4. Stock Analysis

    Obamacare Affirmed - What's the Investing Impact?

  5. Stock Analysis

    Sarepta Therapeutics One Step Closer to Drug Approval

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!