A shooting star is a fairly popular pattern among financial market traders. It is easily recognizable and reliable enough. But it does not appear as often as many would like. In addition, a shooting star is not very actively used on the price charts of currency pairs. This is because the model assumes a gap between the star and other candles. Although this condition is not necessary, it significantly enhances the signal. We will discuss how the shooting star looks, how it is formed, and how to enter the market with the shooting star candlestick strategy.
Like most reversal candlestick figures, a shooting star is characterized by the shape and location of only one Japanese candlestick. The requirements for its form are the following:
Very often, a shooting star rolls back from a significant level of support-resistance. This is evidenced by the presence of a long candlewick. However, this is not always the case. A shooting star may mean that the uptrend has only lost its strength. The impulse may come after some flat. It is also worth considering that the Shooting Star is not the strongest figure in the Price Action system.
You need to consider the following:
The formation of a Shooting Star candlestick strategy does not guarantee anything. You must wait for confirmation. As always, this confirmation is the next candle formed after the pattern. And it should be bearish with a sufficiently large body. If there is a gap in the pattern, the bearish candle should block it. At the close of such a candle, it is necessary to enter into a deal. And if the body of a shooting star breaks through the resistance level, then you should not risk entering a deal.
A shooting star is a simple candlestick figure. Compliance with the conditions for its formation will help you to navigate the financial market on time and benefit from it.