Shooting Star and Hammer Candlestick Patterns
Twenty Fifth session of Forex Training
Welcome back to Forex professional training in financial markets.
Shooting Star Candlestick Pattern
Shooting Star Candle is formed after an upward trend, indicates a reversal trend on an upward movement.
Shooting Star can be either black or white candle which may have a tiny Shadow under the main body.
The upper Shadow is considerably longer which is made by an upward trend, followed by a reversal movement caused from a significant news or event in the market.
The decreasing model in which Close price is lower than Open price, number 3 & 4, have more considerable effect on price movement rather than the increasing model, number 1 &2.
The more powerful candle does not have any Lower Shadow.
Normally, Upper Shadow is 3 times longer than the main body, however, it would be considered more favorable if the Upper Shadow is 5 times longer than the main body.
Trader can find multiple examples on MT4.
After an uptrend, a decreasing Shooting Star has formed which indicates a reversal trend.
It was recommended that a trader places a Sell order just below the Low or Close price of given candle with TP amount of candle length, 16 pips, under order entry price.
Shooting Star is a reliable pattern that has a significant effect on technical analysis.
Another example shows an increasing Shooting Star that has been formed after an increasing movement, then the trend followed a decreasing direction.
On a Range trend, Shooting Star has no effect on market price trend. Thus, Shooting Star indicates a reversal trend after it is formed on an upward trend.
The most powerful Shooting Star is the decreasing type that has no Lower Shadow.
Hammer Candlestick Pattern
Hammer candle is like a Shooting Star, however, it is formed on a downward trend.
It is reversal pattern that has long Lower Shadow and tiny or no Upper Shadow.
In this candle, market price increased abruptly after it has met a certain low price.
The Lower Shadow is created by an important news or event that has reversed the downward direction.
It may have no Upper Shadow, with increasing or decreasing structure.
The most powerful Hammer is the one with increasing main body, Close price is higher than the Open price, without any Upper Shadow.
If The Lower Shadow is 5 times longer than the main body, it would have more considerable effect on the trend movement.
Trader can find numerous Hammer candles on a chart.
For example, after a long decline in price market a Hammer candle has formed and trend has reversed to upward direction.
Another powerful Hammer candle has shown that market changed its direction towards increasing trend.
Trader must practice intensely to develop an ability of detecting effective candles and patterns.
Hammer and Shooting Star candles are a couple of the most significant patterns a trader must consider.
That concludes this session, until next time and another session take care.