Elearnmarkets - Financial Market Learning
  • Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
  • Courses
  • Webinars
  • Go To Site
  • Login
Elearnmarkets
  • Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
Webinars
Elearnmarkets - Learn Stock Market, trading, investing for Free
No Result
View All Result
Home Technical Analysis

Shooting Star Candlestick – Formation, Example & Limitations

Elearnmarkets by Elearnmarkets
May 16, 2022
in Technical Analysis
Reading Time: 6 mins read
0
17.6k
VIEWS
Share on FacebookShare on TwitterShare on WhatsApp

Shooting Star Candlestick Pattern- What is the first thing that comes to your mind when you read the term “Shooting Star”?

Isn’t a star falling close to the earth’s surface?

But how is it related to Technical Analysis?

Well, a shooting star is a bearish candlestick pattern having a long upper shadow and no lower shadow at all.

Let us discuss this bearish reversal candlestick pattern in details:

Table Of Contents
  1. What is the Shooting Star Pattern?
  2. Formation of Shooting Star:
  3. What does Shooting Star tells you?
    • Learn to trade better with candlesticks in just 2 hours by Market Experts
  4. Trading Example:
  5. Difference between Shooting Star and Inverted Hammer
  6. How to use Shooting Star Candlestick Scans in StockEdge?
  7. Limitations of Shooting Star:
    • Key Takeaways:

What is the Shooting Star Pattern?

A shooting star is a type of candlestick pattern which forms when the price of the security opens, rises significantly, but then closes near the open price.

The distance between the highest price of the day and the opening price should be more than twice as large as the shooting star’s body.

It occurs at the end of uptrend and signals bearish reversal.

Formation of Shooting Star:

Here is the formation of shooting star candlestick pattern:

shooting star candlestick pattern

What does Shooting Star tells you?

Shooting stars signals a potential downside reversal and is 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.

At the end of the trading session, the sellers push the price down near the open.

Learn to trade better with candlesticks in just 2 hours by Market Experts

This shows that the buyers have lost control by the end of the day, and the sellers have taken over.

The long upper shadow indicates that the buyers are losing position as the price drops back to the open.

The candle after the shooting star gaps down and then moves lower on heavy volume.

This candle helps in confirming the price reversal and indicates that the price will continue to fall.

Trading Example:

Before trading with the shooting star, one should remember the following points:

  1. Trade Entry: Before you enter a shooting star trade, you should confirm that the prior trend is an active bullish trend.
  2.  Stop Loss: You should always try to use a stop-loss order when trading the shooting star candle pattern.
  3. Taking Profits: The price target for this trade should be equal to the size of the shooting star pattern.

Below is an example of the shooting star candlestick pattern in the daily chart of Nifty. We can see how the shooting star is formed after a strong uptrend and signals a bearish reversal.

nifty shooting star

Difference between Shooting Star and Inverted Hammer

The inverted hammer and the shooting star look almost the same but they have a difference

A shooting star occurs when the price moves up and then the prices fall. Whereas an inverted hammer candlestick occurs after a price falls and it rises.4

To know about other candlesticks, read our blog on All 35 Candlestick Chart Patterns in the Stock Market-Explained

How to use Shooting Star Candlestick Scans in StockEdge?

You can also use the Shooting Star scans in StockEdge web version:

Steps to use Shooting Star Candlestick scans in StockEdge:

  • Under the “Candlestick Scans” we can see Bearish Reversal scans as shown below:
stockedge scans
  • When we click on the “Bearish Reversal scans” we can see “Shooting Star” scan, click on that:
candlestick scans
  • After selecting on it, you will get a list of stocks in which “Shooting Star” pattern is formed as shown below:
bearish reversal scans

Limitations of Shooting Star:

One should not only rely on a candle pattern like in a shooting star for making trading decisions.

This is why confirmation is required, one can confirm by the next day candle or other technical analysis indicators.

One should also use stop losses when using candlesticks to control the losses.

A candlestick pattern is more significant when it occurs near an important level signaled by other forms of technical analysis.

Key Takeaways:

  • A shooting star is a type of candlestick pattern which forms when the price of the security opens, rises significantly, but then closes near the open price.
  • A shooting star is a bearish candlestick pattern having a long upper shadow and no lower shadow at all.
  • There is a difference between a shooting star and inverted hammer.
  • One should not only rely on a candle pattern like in a shooting star for making trading decisions.

Happy Learning!

Tags: candlestick beginners guidecandlestick patternenglishshooting startechnical analysis
ShareTweetSend
Subscribe To Updates On Telegram Subscribe To Updates On Telegram Subscribe To Updates On Telegram
Previous Post

How to create a Financial Planning Calendar to achieve your Goals?

Next Post

Accounts Payable – Meaning, Importance, Example & Days

Elearnmarkets

Elearnmarkets

Elearnmarkets (ELM) is a complete financial market portal where the market experts have taken the onus to spread financial education. ELM constantly experiments with new education methodologies and technologies to make financial education effective, affordable and accessible to all. You can connect with us on Twitter @elearnmarkets.

Related Posts

falling window candlestick pattern
Technical Analysis

How to trade using Rising and Falling Three Method Candlestick Patterns

May 26, 2022
234
Technical Analysis

How to use Bullish and Bearish Counterattack Candlestick Patterns

May 25, 2022
802
Technical Analysis

Relative Strength Index (RSI) Range Shift- A Simple but Effective Trading Strategy

May 24, 2022
3.7k
Technical Analysis

Triple candlestick patterns: Understand Three Outside up and Three Outside Down Candlestick Patterns

May 23, 2022
7k

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Follow Us

Facebook-f Twitter Instagram Linkedin-in Youtube Telegram

Download App

Register on Elearnmarkets

Continue your financial learning by creating your own account on Elearnmarkets.com

Register Free Account

Get Articles On Email

Enter your email address:

Categories

  • Basic Finance
  • Derivatives
  • Financial Planning
  • Fundamental Analysis
  • Technical Analysis
  • Marketshala
  • Miscellaneous

© 2022 Elearnmarkets . All Rights Reserved

  • Visit Elearnmarkets
  • Courses
  • Webinars
  • Financial Guides
  • Get Free Counselling

Get Elearnmarkets App

No Result
View All Result
  • Article Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • Hindi
    • Bengali
    • English
  • Courses
  • Webinars

© 2020 Elearnmarkets All Rights Reserved

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
ELM School

LOVING OUR BLOGS?

Explore more content for free at ELM School.

Start reading & learning from various text-based modules covering all aspects of finance from today!

VISIT ELM SCHOOL