Today we will discuss a pattern that is considered one of the most prominent and powerful patterns without any exaggeration and there is often a great deal of confusion in understanding this pattern among many traders whether beginners or professionals because this candle carries a completely different psychology compared to other candles.
So where does this candle form
What is its exact shape
What are the conditions for its appearance
And how can trades be entered based on the formation of this pattern
Definition of the Shooting Star Pattern:
It is a bearish pattern that appears within a resistance area and is formed by a small candle body with a long upper wick usually ranging from two to three times the size of the body.
Psychology:
The seller shows clear selling strength which leads to the formation of the long upper wick as a result of selling pressure and the buyer is unable to confront this pressure so the candle closes in the lower third of its range.
The decisive point that will help you distinguish the Shooting Star candle from any other candle is the presence of a gap or a distance between the body of the Shooting Star candle and the body of the previous candle. The larger this distance is, the stronger and more aggressive the selling pressure becomes after the Shooting Star forms. The word “star” refers to the distance, the separation, or the gap.
In stock markets this candle appears more frequently compared to the forex market because stock markets experience what are known as gaps which are spaces that form between candles as a result of high buying volumes or heavy selling volumes at the market open.
The candle is not classified as a Shooting Star unless there is a distance or a gap separating it from the previous candle.
How do we enter trades based on the formation of this pattern
After the candle is completed and all its conditions are met a sell trade is entered the target is the first low that price encounters while the stop loss is placed above the candle by a distance equal to twice the spread value.
If you fully adhere to all the conditions mentioned in this article you will achieve many profits solely from using this pattern in trading.
