Candlestick shooting star model
Candlestick model "Shooting Star" is a reversal model, which consists of a single candlestick with a short body and a disproportionately large length of the upper shadow. The ideal option is when such a candle does not have a lower shadow, and on the graph you can clearly see the gap between its body and the body of the previous candle. The color of the candlestick of the model does not matter - it can be both downward and upward.
The candlestick pattern implies the following psychology: the period opens near the minimum value, then the price rises rapidly, but also drops rapidly. A candle closes near the opening price and this indicates that sellers have gained the upper hand and now we should expect a downward movement.
Carrying out the analysis of Japanese candles and making trading decisions based on the data of this pattern, you need to remember some rules. So, the principle of trading during the appearance of this model on the market is to open short positions with a short stop in the place behind the top point of the star. It should be remembered that there is a probability of entering the market at the very beginning of the impulse wave, when a good profit potential is observed.
The “Shooting Star” itself is not considered a strong single signal to turn, so it should be supported by other signals (the presence of a strong resistance level at the place where the model appears, the oscillator leaves the overbought zone).
To successfully trade, you need to know the features of this pattern.
This candlestick model does not give particularly strong and significant signals. It is especially appreciated and taken into account in the analysis if the market is “overheated” when, after a long bullish trend, the oscillator speaks of the overbought market. The candle of this pattern can have any color, but black is stronger than white. The small size of the candle body can also act as an enhancing factor: the smaller it is, the stronger the model.
Many Japanese candles (combinations thereof) are used only on large time frames, but the "Shooting Star" can be detected on the intraday price chart. This signal requires mandatory confirmation. Weakening the “Shooting Star” model can penetrate the body of the model of a significant resistance level, the presence of a strong “bullish” candle in front of the formed model.
The appearance of the “Shooting Star” model on the price chart is far from an unambiguous signal of a change in trend, since the figures are not so strong as to not require confirmation.