{"id":3959,"date":"2020-04-10T03:28:15","date_gmt":"2020-04-10T03:28:15","guid":{"rendered":"https:\/\/trade-malaysia-option.com\/shooting-star-candle-strategy\/"},"modified":"2023-02-04T11:34:11","modified_gmt":"2023-02-04T11:34:11","slug":"shooting-star-candle-strategy","status":"publish","type":"post","link":"https:\/\/trade-malaysia-option.com\/en\/shooting-star-candle-strategy\/","title":{"rendered":"Shooting Star Candle Strategy"},"content":{"rendered":"

The shooting star candlestick strategy explores a small bearish candlestick reversal pattern that looks similar to an inverted hammer.\u00a0Among traders price action shooting stars are also known as Pin Bars and have some unique price characteristics.\u00a0This makes it a very “dangerous” pattern if it develops in the right location.<\/span><\/p>\n

If this is your first time on our website, our team at Trading Strategy Traders welcomes you.\u00a0Make sure you hit the subscribe button, so you get your Free Trading Strategy every week straight into your email box.<\/span><\/p>\n

Once you understand what is going on in the trading stars, you will understand why a single candlestick pattern has the power to signal an uptrend reversal.\u00a0Very few people are good at reversal trading.\u00a0In fact, most traders do it so badly that they burn their accounts.<\/span><\/p>\n

The best shooting strategy will address this issue and will show you how to catch a falling knife without cutting our fingers.\u00a0The shooting star candlestick pattern can help you how to spot the top in the market and how to trade it correctly.<\/span><\/p>\n

First of all, let’s go over some basics:<\/span><\/p>\n

Shooting Star Candlestick Chart Pattern \u2013 Definition<\/span><\/h2>\n

A shooting star is a bearish reversal chart pattern characterized by a long upper axis, little or no lower axis and a small body.\u00a0In technical analysis, a shooting star pin bar consists of a single candlestick.<\/span><\/p>\n

A reversal star strike is only reliable when it occurs at the end of an uptrend.<\/span><\/p>\n

The figure below is a good representation of the Shooting Star candlestick pattern:<\/span><\/p>\n

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Depending on your chart settings, the actual body of the inverted hammer can be green (bullish) or red (bearish).\u00a0However, the shooting star fell more strongly because the closing price was lower than the opening price.<\/span><\/p>\n

Another characteristic of the descending shooting star is that the wicks should be at least 2-3 times the size of the body.<\/span><\/p>\n

Here’s how a real shooting star pattern looks like on a candlestick chart:<\/span><\/p>\n

\"\"To properly understand the bulls and bears behind the shooting star pattern, let’s examine this candlestick pattern in more detail.<\/span><\/p>\n

Psychology Behind Shooting Stars<\/span><\/h2>\n

Who is in power?<\/span><\/p>\n

The Bulls?\u00a0Or Bears?<\/span><\/p>\n

At first, the cows were in control because the flow increased while continuing to move.\u00a0Bulls pushed prices to new highs.\u00a0Once the bulls hit the climax and hit the high candle, everything looks bullish.<\/span><\/p>\n

However, at this stage, the bears stepped into the market and fought back.\u00a0They managed to overcome the bulls and drive the price back below the opening price.<\/span><\/p>\n

In the case of a bearish shooting star, the closing price will be below the opening price and near the low bar.\u00a0And, in the case of a bullish shooting star, the closing price will be above, but close to the opening price, in its close range.<\/span><\/p>\n

The ability of the reverse hammer to lower the pressure on the candle close below the opening price gives the bearish shooting star more power to reverse the prevailing uptrend.<\/span><\/p>\n

What is Trading Star Trading?<\/span><\/h2>\n

We need to train our eyes to read the sentiment of hammer candles, taking into account the overall market environment.\u00a0It is futile to identify the exact star of the book’s text.<\/span><\/p>\n

If you do not have an uptrend before the hammer candle reverses, then it is not a reversible candlestick pattern.\u00a0In this case, shooting star trading will fail.<\/span><\/p>\n

The shooting star candle is only confirmed once we break below the low candle.\u00a0But depending on your risk profile, you should seek confirmation from other sources to validate the trade.<\/span><\/p>\n

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We do not recommend being an aggressive trader when trading star chart patterns.<\/span><\/p>\n

You can propose different types of entry strategies, but be aware that the more points you use, the further the price can move from the ideal entry price.<\/span><\/p>\n

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Now, before we will outline the best shooting star strategy rules.\u00a0We always recommend taking a piece of paper and a pen and observing these rules.<\/span><\/p>\n

For this demonstration, we will look at a downward shooting star or an upside down hammer.<\/span><\/p>\n

Shooting Star Candle Strategy<\/span><\/h2>\n

The shooting star candlestick strategy is a very simple but very effective method for financial market trading.\u00a0You can trade stocks, Forex, currencies, commodities, futures and even cryptocurrencies on various time frames.<\/span><\/p>\n

The type of trading setup we will suggest through this reversal trading strategy has an unusually high success rate.\u00a0However, the only downside is that they will only appear on your Forex candlestick chart once in a while.<\/span><\/p>\n

Let’s get started and get our feet wet.<\/span><\/p>\n

Step #1: Attach the Chaikin Money Flow Indicator to the Time Frame of Your Choice<\/span><\/p>\n

Start first by getting your chart ready for battle.\u00a0Simply install the Chaikin Money Flow indicator on your favorite time frame.\u00a0This is the only additional technical tool we will use to confirm the validity of shooting star patterns.<\/span><\/p>\n

Using the CMF indicator, we achieve one key point.<\/span><\/p>\n

The validity of a bearish shooting star will be confirmed or canceled immediately as soon as the inverted hammer drops on our Bitcoin candlestick chart.\u00a0This means that the price will not move further from the ideal entry price.<\/span><\/p>\n

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Now we focus on price action.<\/span><\/p>\n

See below:<\/span><\/p>\n

Step #2: The Shooting Star candle should come after a strong uptrend<\/span><\/p>\n

Location, or where shooting star candles grow, matters a lot.<\/span><\/p>\n

This whole ingredient is what makes the bearish breakout star candle perform with such high precision.\u00a0We need a strong uptrend that has two important characteristics:<\/span><\/p>\n