The shooting Star:

The Shooting formation is created when the open, low, and close are roughly the same price. Also, there is a long upper shadow/ wick, generally defined as at least twice the length of the real body. When the low and the close are the same, a bearish Shooting Star candlestick is formed and it is considered a stronger formation because the bears were able to reject the bulls completely plus the bears were able to push prices even more by closing below the opening price.

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The long upper shadow of the Shooting Star implies that the market tested to find where resistance and supply was located. When the market found the area of resistance or the highs of the day, bears began to push prices lower, closing the candle near the opening price. Thus, the bullish advance upward was rejected by the bears.

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Ultimately, a Shooting Star candle indicates that the prior uptrend is about to end and may reverse into a downtrend or move sideways and into a period of consolidation. This formation is an excellent trade signal upon the high test of a resistance level by the shadow / wick. You can execute a sell trade upon the close of the candle with a stop loss 10 PIPs above the area of resistance as displayed on the following page.

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