Shooting Star (Inverted Hammer)

Shooting Star (Inverted Hammer)

Characteristic of Candlesticks: Reversal Relevance of Candlesticks: Bearish Prior Trend of Candlesticks: Bullish Reliability of Candlesticks : 2nd Grade Confirmation of Candlesticks: Reliable Candlestick Patterns Key Reference

DESCRIPTION

Shooting Star pattern is followed by a bullish candlestick at the top of the uptrend followed by a gap up on and then on the way down thus forming a long shadow at the top and closes below the opening price with was identified as a Inverted Hammer.

Shooting Star pattern is an top reversal pattern which is highly reliable for reversing an uptrend to a downtrend.


PATTERN RECOGNITION

1. Shooting Star pattern can be identified by a uptrend followed by a top reversal.

2. Refering to above diagram, firstly we will see a bullish candlestick at the top of the uptrend followed by a gap up on the next candlestick.

3. Finally we will see the following candlestick move with a gap up forming a long shadow and then move down which closes below the opening price.


EXPLAINATION

The Shooting Star pattern is formed at the top of a uptrend.

The first candlestick shows a bullish candlestick which indicate buyers are currently in control.

Following candlestick open with a gap up forming a long shadow then on the way down which closes below the opening price forming a Inverted Hammer.

This clearly indicated that buyers have no strength and sellers are pushing the price down forming a Inverted Hammer indicating bear is now in control.

This 2nd grade reversal pattern is a reliable group of reversal pattern but require confirmation.


POINT TO NOTE

Refering to above diagram, we should note that the second candlestick can be a bullish or bearish which form a Inverted Hammer.

The inverted hammer candlestick shadow length should be more than 2 times the length of the full body.

The Shooting Star pattern is highly reliable but requires confirmation. Observe the next candlestick should also be a bearish candlestick which closes below previous inverted hammer candlestick.

CANDLESTICK PATTERNS KEY REFERENCE

Irrespective of Color (Can be bullish or bearish)

Uptrend

Consolidation

Downtrend

ANTICIPATED DIRECTION OF TREND

Lighter Arrow = Lower Probability
Solid Arrow = Higher Probability

More Likely to go sideway, Less likely to rally

More likely to rally, Less likely to go sideways

More likely to go sideway, Less likely to fall

More likely to fall, Less likely to go sideways