shooting star candlestick 

What is a shooting star candlestick?

A shooting star candlestick is a common trade charting approach. It is a single candle, and it is a bearish reversal pattern that develops following a price increase.

The Shooting Star candlestick pattern suggests that the market is shifting from an uptrend to a downtrend (Price decline) . 

It is essentially the inverse of a hammer. Depending on your chart settings, the real body could be red, green, black, or white. Of course, the red is a little more bearish than the green.

Features of a Shooting Star Candlestick

A shooting star candlestick can be recognized with;

• The upper wick must be at least two or three times the length of the candlestick, ideally, there's no wick below the candle, however, a very small wick can be acceptable.
• It must appear at the top of an uptrend (at the resistance or overbought zone) with at least three bullish candles preceding the shooting star, it’s not a valid shooting star pattern if it isn't at an uptrend.

Measure the length of the upper wick to the size of the body to create the perfect shooting star candlestick that will give you a higher percentage of confirmation.

For example, if the upper wick is twice the size of the body and the lower wick is little, we may state that an 85 percent confirmation is guaranteed.

It is 70 percent if an upper wick is formed and it is twice the size of the actual body but no lower wick is found on the candle, nevertheless, additional criteria must be reviewed to confirm this.

Furthermore, the confirmation is 55 percent if the upper wick is the same or almost the same size as the body.

When the shooting star candlestick body is little or no real body is formed, we may claim our confirmation is 75 percent because the pattern is called gravestone Doji. 

To get the best result always use the 85 percent shooting star candlestick pattern when it is formed after at least three or more green candles.

Although the color of the body is unimportant, a red body is preferred over a green body.

The larger the price rejection, the longer the wick. It's also worth noting that just though it's a bearish reversal pattern; it doesn't mean you should trade it in isolation.

When does the shooting star candlestick appear?

The Shooting Star Candlestick appears when Buyers attempt to push prices upward when the market opens. However, to push it down, the sellers will create a lot of selling pressure. In other words, it happens when the market price of an asset is pushed up significantly, but then rejected and closes near the opening price.

On the Solana/ USDT daily chart, for example, we have an uptrend with a shooting star candlestick right at the top.

The upper wick or tail is bigger than two times the range of the real body, indicating a bearish rejection of higher prices confirmation, with price trading below the shooting star candlestick bottom, indicating a change in trend. 

Note that reversal patterns are beneficial for both entry and exit; in this case, we go short if the price trades below the low of the shooting star candle, or we exit long if the price trades below the low of the shooting star candlestick.

Distinguish the shooting star candlestick and the inverted hammer.

Both the shooting star candlestick and the inverted hammer have a small body and a long upper wick. The shooting star candlestick and the inverted hammer, however, appear in a variety of contexts.

The inverted hammer is a bullish reversal pattern that frequently emerges at the bottom of a downtrend, whereas the shooting star candlestick is a bearish reversal pattern that frequently emerges at the top of an uptrend.  

Read Also at: https://www.nairaland.com/7131805/shooting-star-candlestick-pattern-cryptocurrency