An Evening Star is a stock-price chart pattern used by technical analysts to detect when a trend is about to reverse. The pattern forms when there is a long uptrend, followed by a short downtrend, and then finally another long uptrend. This signals that the trend has reversed and investors should sell their stocks.The first indication of an evening star forming is when the price makes a new high but fails to break above it. This is followed by a sharp decline in prices, which creates the "star" part of the pattern. Finally, prices rebound and make another new high, completing the three-part formation.Investors who are able to spot this pattern can profit from its reversal by selling their stocks during or after the sharp decline phase. However, it's important to note that not all evening stars result in reversals – sometimes they can be continuation patterns instead.
