6. The Shooting Star

The Shooting Star:

A Shooting Star candlestick formation occurs when the open, low and close are almost the same price. There will be a longer upper shadow that is twice as long as the body. When the low and close are the same, a Bearing Shooting Star candlestick formation is formed. Seen as a strong formation because the Bears were able to shake of the Bulls plus they were capable of pushing the price even lower than the opening level. A strong sign that the Bears will take some of their lost territory back.

The longer upper shadow implicates that the market has been tested to find out the Resistance level. Once the market found the Resistance or the highgs of the day the Bears started to push the price down. That is why the candlestick shows us a close nearby the opening level. The Bullish attempt was defended well by the Bears. They even managed to score a little point at the end.

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Basically the Shooting Star candlestick shows us the end or almost end of the uptrend and could turn in a reverse trend (downtrend in this case). Or it ends up in an era of consolidation (horizontal Price Action movement). This candlestick formation is a really good trade signal. You can setup a sell trade after the close a the Shooting Star candlestick with a Stop-loss 10 PIPs above the Resistance area as shown underneath.  

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