Inverted Hammer & Shooting Star Candlesticks
Inverted hammer candlesticks and shooting star candlesticks look alike. These candlesticks have a long upper shadow & a short body at the bottom. Their color does not matter. What matters is where they form if at the top of a market trend (star) or bottom of a market trend (hammer).
The difference between the two is that inverted hammer candlestick is a bullish reversal pattern setup while shooting star candle is a bearish reversal pattern.
Upwards Trend Reversal - Shooting Star CandlesDownwards Trend Reversal - Inverted Hammer Candles
Inverted Hammer and Shooting Star Japanese Candles
Inverted Hammer Japanese Candlestick
The Inverted Hammer candle is a bullish reversal candlestick pattern. It forms at the bottom of a Gold price downwards trend.Inverted hammer candlestick occurs at the bottom of a downtrend & indicates the possibility of reversal of the downwards Gold price trend.
Inverted Hammer Candlestick Pattern
Technical Analysis of Inverted Hammer Candle
A buy signal generated using the inverted hammer candlestick setup is confirmed when another candle is formed and this new candle closes above the neck-line, this is the opening of the candlestick on the left side of this hammer candlestick as shown above. The neck line in this case is a resistance zone.
If the candlestick formed next to the hammer candlestick does not close above the neck line, then as a trader you wait to see if the subsequent candlestick closes above the neck line. Only when a candlestick that closes above the neck line is formed is when this bullish reversal pattern setup is confirmed.
Stop orders for the buy trade that has been opened should be placed a few pips below the lowest price on the recent low.
An inverted hammer candlestick is named so because it signals that the market price is hammering out a bottom.
Shooting Star Japanese Candlestick
The Shooting Star candle is a bearish reversal candlestick pattern. It occurs at the top of an upwards trending market.Shooting Star candle occurs at the top of an up trend where the open price of XAUUSD is the same as the low - meaning price opened at that point rallied up but was pushed back down to close near the same opening price.
Shooting Star Candlestick Pattern
Technical Analysis of Shooting Star Candlestick
A sell signal generated using the shooting star candlestick pattern is confirmed when a new candlestick closes below the neckline: this is the opening of the candlestick on the left side of the shooting star candlestick as shown on example above. The neck line in this case is a support zone.Stop orders for the sell trades opened using this set-up should be placed a few pips above the highest price in the recent high.
The Shooting Star candlestick is named so because it's formed at the top of an upward XAUUSD market trend - this candle pattern resembles a shooting star up in the sky thus it name - shooting star.
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