Technical Analysis Shooting Star Pattern

Stock Market Investing - Technical Analysis using Candlestick Charts - Shooting Star Bearish Reversal Pattern

In the stock market candlesticks system of technical analysis a shooting star is a candlestick with a small body (white or black or green or red depending on which color scheme you are using) , a long upper shadow and a nonexistent or very small lower shadow. The upper shadow or wick should be at least twice the length of the body and the range between high and low should be relatively large. The high/low range should be large when compared with the range over the last 10-20 days.

For a candlestick to be a shooting star, it should gap up relative to the previous day. This rule is not hard and fast however, especially when dealing with indices and stocks, as these often open near the previous day's close. A gap up represents a stronger shooting star, but even without a gap up the reversal is still valid.

A bearish reversal also needs to be confirmed. The reversal shows that there were more sellers than buyers for one or more days, but it is not clear that it will continue. Confirmation is therefore required. Bearish confirmation takes the form of further moves to the downside, for example a gap down, a long black candlestick or significant decline in volume. Candlestick charting patterns are short-term indicators and usually last for 1-2 weeks, bearish confirmation should therefore be evident within 1-3 days.

For a more detailed explanation of shooting stars, candlestick charts and technical analysis and how this helps when trading stocks and shares check out this excellent video from yourtradingcoach.com

Home : Online Stock Trading