candlestick bible study

The shooting star is a bearish reversal candlestick pattern that appears at the top of an uptrend, signaling that prices may soon fall. It features a small real body near the lower end, a long upper shadow (at least twice the body length), and little to no lower shadow.

Key Takeaways:

Significance: It indicates that buyers initially pushed prices higher, but sellers took control, forcing the price down, which shows fading bullish momentum.
Appearance: A small body (red is more bearish, but green is possible) at the bottom, with a very long upper wick.
Context:
Confirmation: Traders often wait for the next candle to close below the shooting star to confirm the trend reversal before trading.
Distinction: It is often confused with the inverted hammer, which looks identical but appears at the bottom of a downtrend to signal a bullish reversal.

Trading Strategy:

Entry: Sell after the confirmation candle closes lower than the shooting star's body.
Stop-Loss: Place a stop-loss just above the highest point of the long upper shadow.
Resistance: The signal is stronger if it appears near a known resistance level.

Note: The shooting star is a technical analysis indicator, not a guarantee of a price reversal.

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