Understanding Candlesticks_5. Shooting Star and Inverted Hammer Candlestick

Lesson 5: Shooting Star and
Inverted Hammer Candlestick

Shooting star is a bearish reversal signal. It has a small real body, a very small
or no lower shadow and a long upper shadow. For it to be a proper shooting star, the
upper shadow needs to be at least twice the size of the real body.

Let’s take a look at how a shooting star forms. The session started with strong
bull pressure. They drove the price up, but then the new high was rejected by bears
who managed to push the price back down.

The reversal signal strengthened when bears pushed the price lower than the
open and closed at the session’s low. As with a hammer, a shooting star has its own
double on the other side of the trend. It is called an inverted hammer and it can be
seen during a downtrend.

An inverted hammer is often considered a bullish reversal signal. Once again, I
would like you to stop and consider before opening long positions after an inverted
hammer has appeared.

Remember that a long upper shadow means that the initial bullish move was
rejected by bears.

When we are trading in reversals, we really want to see a change in the market
psychology, and whatever candlestick signal you see, a long upper shadow is by no
means always bullish.