Shooting Star Candlestick Pattern Strategy
For those who want to improve the odds of success, pairing this pattern with well-defined resistance zones, momentum indicators, and volume analysis can increase its reliability. The success rate of the Shooting Star Candlestick Pattern can be around 54 – 71%. Just like other candlestick formations, the shooting star’s success rate can vary based on context, timeframes, and confirmation. Experienced traders note that it performs best on higher time frames, 4-hour, daily, and weekly, where noise is lower.
Trading Strategies
- The meaning of the shooting star candlestick pattern is that buying pressure is starting to dissipate and a potential trend reversal may be on the horizon.
- A Shooting Star is a candlestick pattern formed when currency pair prices open, increase immediately, and then close near the opening price, indicating a downtrend reversal.
- Combining the shooting star candlestick pattern with RSI provides an even greater indication of negative momentum.
- The shooting star is a highly versatile candlestick pattern in terms of how you can approach trading it.
Doji, on the other hand, has a body that is smaller than that of a shooting star and long upper and lower wicks. Shooting stars are however very similar in appearance to inverted hammer candlesticks. Whereas, a doji is considered a signal of indecision wherein the opening and closing prices lie very close to each other owing to the struggle to control the prices by the bulls and the bears. Bullish candlestick patterns include those candlesticks which signal bullish trend reversals such as hammer, piercing pattern, bullish harami, morning star, inverted hammer, tweezer bottom etc.
- The available research on day trading suggests that most active traders lose money.
- If the shooting star appears in a sideways or choppy environment, it might not carry the same potential for a meaningful reversal, since the price lacks a strong preceding rally to reverse from.
- The main advantage of shooting star candlestick patterns is the ease of spotting them on the price chart.
The Evening Star pattern is a significant top trend reversal pattern that warns of a potential reversal of an uptrend. It is a triple candlestick pattern that is similar to the Abandoned Baby Top. As it is a top trend reversal pattern, the Evening Star pattern is a bearish pattern that should only be considered when it appears in an established uptrend.
What is a Shooting Star Candlestick Pattern?
In short, a Shooting Star is a bearish reversal candlestick pattern that shows rejection of higher prices. Shooting stars signals a potential downside reversal and is shooting star candlestick most effective when it forms after 2-3 consecutive rising candles having higher highs. A shooting star opens and rises strongly during the trading session, showing the same buying pressure that is seen over the last trading sessions. Traders use the shooting star candlestick to trade various strategies, each with its strengths and weaknesses. The opening and rise of the shooting star candle often indicate the same buying pressure as seen in the previous trading sessions.
Moreover, consider partial profit-taking if the price descends, then look to lock in the remainder if momentum stays strong. This layered exit approach suits traders who want to secure gains while retaining an open position in case the down-move extends. Check if the candle forms near a well-established resistance line, a Fibonacci extension, or a cluster of prior highs.