Inverted Hammer & Shooting Star Candlesticks
Inverted hammer candles and shooting star candles look alike. These candlesticks have a long upper shadow & a short body at the bottom. Their color doesn't 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 candle is a bullish price reversal pattern setup while shooting star candle is a bearish price 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 price reversal candlestick pattern. It forms at the bottom of a Gold price downwards trend.Inverted hammer candle occurs at the bottom of a downtrend & reflects the possibility of reversal of the downwards Gold price trend.
Inverted Hammer Candle Pattern
Trading Analysis of the Inverted Hammer Candle
A buy signal generated using the inverted hammer candle 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 the hammer candle just as shown above. The neck line in this case is a resistance zone.
If the candlestick formed next to the hammer candle does not close above the neck line, then as a trader you wait to see if the subsequent candle closes above the neck line. Only when a candle that closes above the neck line is formed is when this bullish price reversal pattern setup is confirmed.
Stop pending orders for the buy trade that has been opened should be placed a few pips below lowest price on the most recent low.
An inverted hammer candle is named & called so because it signals which the market is hammering out a bottom.
Shooting Star Japanese Candlestick
The Shooting Star candle is a bearish price 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/level rallied upwards but was forced back down to close near the same opening price level.
Shooting Star Candle Pattern
Analysis of the Shooting Star Candlestick
A sell signal generated using the shooting star candle pattern is confirmed when a new candle closes below the neckline: this is the opening of the candlestick on the left side of the shooting star candle like is shown & displayed on example set-out above. The neck line in this case is a support zone.Stop orders for the sell trade positions opened using this set-up should be placed a few pips above the highest price in the most recent high.
The Shooting Star candle is called & named so because it's formed at the top of an upward XAUUSD Gold market trend - this candle pattern resembles a shooting star up in the sky thus it name - shooting star.
Study More Tutorials & Topics:
- Ehler MESA Adaptive Moving Average(MA) Moving Average EA(Expert Advisor) Setup
- Fundamental Economic Reports Analysis of Forex Market
- Example HK50 Stock Index Trading Strategy
- How to Interpret and Analyze Pips in EURCHF How to Count Pips in EURCHF
- EURCAD Opening Hours and EURCAD Closing Time
- MQ5 Bots & EA Expert Advisors
- Demo Account MetaTrader 4 Download
- Trend Following Gold Strategies
- How to Trade the NIKKEI 225 Indices
- How Do I Place T3 Moving Average Indicator in Chart?
