Definition: Get the highest rated stock from Americanbulls for this pattern >>>
Bearish Shooting Star Pattern suggests that prices
may be approaching to a top. It looks like its name,
a shooting star. The shooting star is a small real body
characterized by a long upper shadow, which gaps away
from the prior real body.
Recognition Criteria:
1. Market is characterized by uptrend.
2. We see a white candlestick in the first day.
3. Prices then open with a gap creating a small real
body at the lower end of the trading range on the second
day.
4. Upper shadow of the pattern on the second day is
usually at least twice as long as the real body.
5. However; second day pattern has no (or close to none)
lower shadow.
Explanation:
The Shooting Star simply tells us that the market opened
near its low, then prices strongly rallied up and finally
prices moved down to close near the opening price. In
other words, the rally of the day was not sustained.
Important Factors:
Bearish Shooting Star Pattern is usually not a major
reversal signal as is the evening star.
The color of the real body is not important.
An ideal shooting star has a real body which gaps away
from the prior real body. Nonetheless, this gap is not
always necessary.
A confirmation on the third day is required to be sure
that the uptrend has reversed. The confirmation may
be in the form of a black candlestick, a large gap down
or a lower close on the next trading day.
