See chart for more details on when to trade them, where to set entry, stop and 1st and 2nd targets.
WHAT IS A SHOOTING STAR CANDLESTICK PATTERN?
A shooting star formation is a bearish reversal pattern that consists of just one candle. It is formed when the price is pushed higher and immediately rejected lower so that it leaves behind a long wick to the upside. The long wick should take up at least half of the total length of the shooting star candle –
Additionally, the closing price should be near the low of the candle. As you can see, this creates an overall bearish structure because prices were unable to sustain their higher trade. A similar structure is observed with the Inverted Hammer pattern however, the Inverted Hammer relates to a bullish reversal signal as opposed to a bearish reversal signal. This candlestick pattern is often revealed at the bottom of a downtrend, support level or pullback.
It is often questioned about the difference between a shooting star formation on a forex pair, stock or commodity. There is no variance between the different financial market types. A shooting star candlestick pattern will offer the same signal/s regardless of the instrument.
ADVANTAGES OF USING THE SHOOTING STAR IN TECHNICAL ANALYSIS
The shooting star pattern is a great tool for novice technical traders due to its simplicity. Spotting a potential shooting star candle is straight forward if traders adhere to the pattern description as explained above.
The candle pattern by itself will sometimes be flawed. However, if the pattern appears near a resistance level or trend line, then the shooting star can add confirmation to the new bearish bias. This is because a single candle is not extremely crucial in the overall trend or market movement. Risk management is important to incorporate when using this candlestick pattern. This provides the trader with a ‘safety net’ should the market move negatively.
Benefits of the Shooting Star candlestick pattern:
Easy to identify
Reasonably reliable if all criteria are met
Suitable for but not limited to novice traders
Limitations of the Shooting Star candlestick pattern:
Shooting Star candle does not dependably define a short trade
Confirmation is needed – further technical/fundamental justification
WHAT IS A SHOOTING STAR CANDLESTICK PATTERN?
A shooting star formation is a bearish reversal pattern that consists of just one candle. It is formed when the price is pushed higher and immediately rejected lower so that it leaves behind a long wick to the upside. The long wick should take up at least half of the total length of the shooting star candle –
Additionally, the closing price should be near the low of the candle. As you can see, this creates an overall bearish structure because prices were unable to sustain their higher trade. A similar structure is observed with the Inverted Hammer pattern however, the Inverted Hammer relates to a bullish reversal signal as opposed to a bearish reversal signal. This candlestick pattern is often revealed at the bottom of a downtrend, support level or pullback.
It is often questioned about the difference between a shooting star formation on a forex pair, stock or commodity. There is no variance between the different financial market types. A shooting star candlestick pattern will offer the same signal/s regardless of the instrument.
ADVANTAGES OF USING THE SHOOTING STAR IN TECHNICAL ANALYSIS
The shooting star pattern is a great tool for novice technical traders due to its simplicity. Spotting a potential shooting star candle is straight forward if traders adhere to the pattern description as explained above.
The candle pattern by itself will sometimes be flawed. However, if the pattern appears near a resistance level or trend line, then the shooting star can add confirmation to the new bearish bias. This is because a single candle is not extremely crucial in the overall trend or market movement. Risk management is important to incorporate when using this candlestick pattern. This provides the trader with a ‘safety net’ should the market move negatively.
Benefits of the Shooting Star candlestick pattern:
Easy to identify
Reasonably reliable if all criteria are met
Suitable for but not limited to novice traders
Limitations of the Shooting Star candlestick pattern:
Shooting Star candle does not dependably define a short trade
Confirmation is needed – further technical/fundamental justification