Evening Doji Star: Reversal or Trap?

An Evening Doji Star is a three-candle formation that appears after an up-move and is watched for signs of a possible reversal.

What the pattern is

Three candles mark the sequence. The first is a long white candle that continues the advance. The second gaps higher and finishes as a doji, its open and close virtually equal. The third opens lower, often with another gap, and closes below the midpoint of the first candle.

What forms it

Price has been rising and the buyers remain in control into the close of the first candle. Overnight, enthusiasm carries price higher still, yet by the end of the second session neither side has gained ground, leaving the doji. The following session opens with sellers in command; their pressure pushes price through the middle of the initial white candle and ends the session there.

What confirms it

Three conditions must line up. The middle candle must be a genuine doji, not merely a small-bodied candle. The doji must also stand apart from the first candle by a clear gap. Finally, the third candle must finish below the midpoint of the opening white candle; anything short of that level leaves the pattern incomplete.

How it fails

If traders label any small candle as a doji, the setup is misidentified from the start. When the middle candle fails to gap away from the first, or when the third candle stops above the midpoint, the structure required for an Evening Doji Star is absent and the pattern is disregarded.