Shooting Star

Shooting Star – Candlestick Reversal Signal

The Shooting Star candlestick signal is a Bearish Reversal Signal indicating price has reached the top of its uptrend. It sends an important alert for those traders with open long positions that it is time to close their trade. For experienced traders watching for new short positions, it offers an early opportunity for greater profits.

To form the Shooting Star Candlestick Reversal Signal you will need the following price activity.   First, there is an established uptrend. The pattern forms when the open and close are near the same price and signifies obvious indecision between the Bulls and Bears. There is a long upper tail, or shadow equaling at least twice the length of the real body. (The upper tail shows the extent of the price movement during the trading period) There should be little, or no, lower shadow (or tail). While not required, this pattern has even greater importance when there is a gap between the real body of the previous trading period.

What does this signal indicate is happening in the markets?
This candlestick formation depicts the battle between the Bulls and Bears. The Bulls are in charge with an established uptrend. The Bulls continue to push prices higher on the market open, but the Bears step in and bring the price back down to near the initial starting point.  This serves as an early warning that while the Bulls may have kept the price movement positive, they are loosing their ability to maintain control.

It is important to note that the visual illustration depicted in this candlestick signal also appears on a downtrend, yet it tells a very different story. This  candlestick formation found in a downtrend is called an Inverted Hammer, and signals the end of a downtrend.

While the price values are identical to bar charts, the candlestick patterns are much easier to recognize. Japanese Candlesticks are the perfect technical analysis tool  for newly beginning investors. They are much easier to recognize and can be learned very quickly.

There are many additional signals important to learn about when studying Japanese Candlesticks. While the shooting star signal is, other signals such as the candlestick hammer signal,  the hanging man candle, the candlestick piercing pattern, and the dark cloud cover are just as  important to learn.

Please continue your Japanese Candlestick education and learn more about the bullish kicker signal.