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Inverted Hammer and Shooting Star Candlesticks

Inverted hammer and shooting star candlesticks look alike. These have a long upper shadow and a short body at the bottom. Their color does not matter. What matters is the the point where they appear whether at the top of a market trend (star) or the bottom of a market trend (hammer).

 

The difference is that inverted hammer is a bullish reversal pattern while shooting star is a bearish reversal pattern.

 

Upward Trend Reversal - Shooting Star Candlesticks

 

Downward Trend Reversal - Inverted Hammer Candlesticks

 

 

Inverted Hammer and Shooting Star Patterns

Inverted Hammer and Shooting Star Candlesticks Chart Patterns

 

 

Inverted Hammer Candlestick

This is a bullish reversal candlestick pattern. It occurs at the bottom of a Forex trend.

 

Inverted hammer occurs at the bottom of a downtrend and indicates the possibility of reversal of the downward Forex trend.

 

Inverted Hammer Candlestick

Inverted Hammer Candlestick

 

 

Technical Analysis of Inverted Hammer Candlestick

A buy is confirmed when a candlestick closes above the neckline, this is the opening of the candlestick on the left side of this pattern. The neckline in this case is a resistance level.

 

Stop orders for the buy trades should be placed a few pips below the lowest price on the recent low.

 

An inverted hammer is named so because it signifies that the market is hammering out a bottom.

 

 

Shooting Star Candlestick

This is a bearish reversal candlestick pattern. It occurs at the top of a market trend.

 

It occurs at the top of an uptrend where the open price is the same as the low and price then rallied up but was pushed back down to close near the open.

 

Shooting Star Candlesticks Chart Pattern

Shooting Star Candlestick

 

Technical Analysis of Shooting Star Candlestick

A sell is confirmed when a candlestick closes below the neckline, this is the opening of the candlestick on the left side of this pattern. The neckline in this case is a support level.

 

Stop orders for the sell trades should be placed a few pips above the highest price on the recent high.

 

The Shooting Star is named so because at the top of an upward market trend this candlestick pattern resembles a shooting star up in the sky.

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