Friday, July 1, 2016

What is Shooting Star: Bearish Reversal Pattern?

What is Shooting Star: Bearish Reversal Pattern?


Shooting Star is a bearish reversal pattern, appearing at market top. Its a small real body with long upper shadow and no lower shadow, which gaps away from the previous candle. This pattern appears in an uptrend. A white candle is seen on first day. Next day, gap up opening happens. This candle appears as a small real body, with upper shadow at least twice as long as the real body. It has no lower shadow.

The pattern indicates that the uptrend is near to an end. Colour of the real body is not important. Gap is not always necessary.

Strategy: A confirmation is required on next day to ensure that uptrend has reversed or closer to the reversal. This confirmation can be in the form of a black candle, a large gap down or a lower close on next trading day.