Shooting Star Candlestick Pattern
A Shooting Star candlestick pattern is a very strong bearish reversal candlestick pattern. A Shooting Star candlestick pattern is a special type of Evening Star candlestick pattern, therefore they have a lot of similarities. The Shooting Star candlestick pattern has a few special requirements though.
A Shooting Star candlestick pattern, since it develops at the tops of uptrends, looks like a star blazing across the horizon. The long upper shadow is the tail of star dust.
Trading starts and the bullish investors appear to be in control as the share price rises, something it has done for a while now as the stock has been in an identifiable uptrend. Because of the bullish exuberance, there may even be a gap-up at the opening of the trading period. Things are looking good.
But then at some point during the trading period, the bullish investors lose control of the share price and bearish investors are able to suppress the share price all the way back down towards the opening price. This sort of trading activity causes a long upper shadow to develop. It also causes a small real body to develop. But the long, upper shadow is the most noticeable feature of this candlestick pattern.
When the next trading period opens, bullish investors are reluctant at first due to the significant selling pressure they just witnessed. This gives bearish investors their opportunity to continue the selling pressure that started during the previous trading period. When the bullish investors fail to regain control of this trading session, it confirms the Shooting Star candlestick pattern's sell signal for those that have long positions. It also confirms a sell signal for those that want to sell the stock short.
Requirements
Listed below are the detailed requirements for a Shooting Star candlestick pattern. These requirements apply to both Shooting Star candlestick patterns and Gravestone Doji candlestick patterns. Gravestone Doji candlestick patterns are a special type of Shooting Star candlestick pattern.
- The real bodies of Shooting Star candlestick patterns can be either green or red colored, but the real body must be very diminutive in nature
- Gravestone Doji candlestick patterns are an exception, they should have almost no real body as the opening and closing prices should be nearly identical
- Gravestone Doji candlestick patterns are an exception, they should have almost no real body as the opening and closing prices should be nearly identical
- Both Shooting Star candlestick patterns and Gravestone Doji candlestick patterns have long upper shadows and do not have lower shadows
- Shooting Star candlestick patterns and Gravestone Doji candlestick patterns must develop at the top of established uptrends, the longer the uptrends preceding the Shooting Star, the better the chances are for a major trend reversal
Shooting Star and the Gravestone Doji candlestick patterns are some of the easiest Doji candlestick patterns to identify.
Characteristics & Observations
Listed below are some of the other characteristics for Shooting Star candlesticks as well as some of my personal observations......
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