Japanese candlesticks - Shooting star
Definition: A shooting star structure is comprised of a single Japanese candlestick. The candlestick has a small body, bullish or bearish, with a large high wick which must be at least twice the length of the body. The closing price of the next candlestick must be lower than the lowest point of the shooting star.
Characteristic: A shooting star often forms after a significant rise characterized by several large green Japanese candlesticks. If the pattern is formed after a bearish trend, it is called an inverted hammer.
Significance: A shooting star is a reversal pattern, it indicates a reversal of a bullish trend. This reflects an overbought market where sellers end up taking over at the end of the period.
Note: It is preferable if the candlestick is bearish, this reinforces the relevance of the shooting star but a bullish candlestick does not invalidate the pattern. The ideal is a shooting star doji. The larger the shadow and the smaller the body, the more powerful the pattern.
Shooting star doji
Invalidation: If the next candlestick is not bearish or does not open on a bearish gap, the shooting star is invalidated.