What is a shooting star candlestick pattern and how to work?
What is the Shooting Star candlestick pattern?
A shooting star candlestick pattern is a bearish reversal candlestick pattern, which is a specific type of candlestick formation that appears on trading charts. It looks like an inverted hammer candle, with a small body candle and a long upper shadow, but no lower shadow.
Important features of a shooting star candle
Small real body (can be either red or green candle).
Long upper shadow (at least 2-3 times the size of the body candle).
There should be no lower shadow.
Appears after an uptrend market.
It should be at the resistance zone.
Identification for shooting star candlestick Pattern?
Price opens and moves significantly higher.
Sellers enter the market, pushing prices back down from the top level.
Price closes near the opening level.
Creates a candle with a small body and long upper shadow.
The important factor for Measurements of shooting star candles.
The upper shadow should be at least 2-3 the size of the real body candle.
The real body should be in the lower 30% of the entire candlestick.
Lower shadow should be minimal or should be non-existent.
Compare the volume with the previous candle volume, which is should be higher.
How to trade with Shooting Star candlestick Patterns?
Wait for the shooting star pattern to fully formation.
Confirm the pattern with the next candle price action pattern.
Look for increased trading volume during pattern formation.
You can add a Moving average indicator tool for more confirmation.
What should be a stop-loss order?
Place stop-loss order above the high of the shooting star candle.
Consider market volatility when placing a stop-loss buffer range.
Use proper position sizing to manage risk 1-2% of the total capital.
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