Evening star
A three-bar bearish reversal: a strong up bar, a small-bodied bar, then a down bar closing below the first bar's midpoint.
The evening star reads the last three bars. The first must close above its open, the second must have a body under 30 percent of the first bar's body, and the third must close below its open and below the midpoint of the first bar's body. When all three hold, the indicator marks the third bar. High and low prices are accepted but never read, so wicks do not count.
How to read it
- Markers sit on the third candle, the bar that completes the pattern.
- Read it as an up move that stalls on a small bar, then sellers take over.
- It fires on about 2.4 percent of one-minute bars, roughly 22 times a day on SPY, so check the trend before acting on one marker.
What it outputs
- Evening star
- Marks the third bar of a bearish three-bar pattern: an up bar, a small-bodied bar, then a down bar closing below the first bar's midpoint.
When it fires
Fires on the third bar when the first bar closed up, the second bar's body is under 30 percent of the first bar's, and the third bar closed down below the first bar's midpoint. It means an up move stalled and sellers took control. It is the completed pattern, not a confirmed reversal.
Pitfalls
- The docstring says the middle bar should gap up, but the code never checks a gap, so overlapping bars count.
- High and low are inputs the code never reads, so a long wick on any of the three bars does not change the marker.
- The marker shows the shape occurred, not that price fell afterwards. The facts include no outcome check, and the shape is common on one-minute bars.