As for this example, we have a NZD/USD daily chart. The price action trades in a clear uptrend as there is a long series of the higher highs and higher lows, which results in gains of 300+ pips. At one point, the bullish candle signals that the bull run is still intact. However, the next candle changes the picture.
It’s a doji candle at the top of an uptrend, which signals the indecision among buyers and sellers as they fight to determine the future trend direction. Finally, the third candle is a long bearish candle, and the evening star formation is created, as all four elements are in the place.
Moreover, the first candle next to the evening star is another red bearish candle, which further validates the idea of a reversal. At this point, we can be very confident of an upcoming decline.