A Shooting Star is a one bar price action pattern that shows up when prices have advanced significantly, but then fall to close near the open. Therefore, a large upper shadow will form, significantly larger than the candle body, indicating price rejection.
What is a Shooting Star
A Shooting Star is a bearish pattern with a long upper shadow, little or no lower shadow and a small body forming near the bar low. In other words, a shooting star is a pattern that forms when prices advance significantly, but then retreats to close near the initial open.
Defined as a reversal pattern, a Shooting Star should appear during an uptrend, the prior being an up-close or a small body bar. An internal Swing Trend for the candlestick indicator determines the current bias. The deviation type, multiplier and swing strength requirement is user selectable via the indicator dialogue box. For the swing strength, the current bar’s low will mark a new N bar low, by default set to 5. Likewise, the upper shadow is set to be x times larger than the body size and the lower shadow, by default a factor of 3. The bullish equivalent of this pattern is the Bullish Hammer.
However, being one bar patterns, they will occur quite frequently. Accordingly, they are not particularly reliable if used without additional confirmation. One may improve the statistical probability by combining with trend filters, such as an moving average or the the Donchian Channel and support resistance levels from our session tools category. An example showing how to combine additional technical indicators with candlestick patterns available here.
Other bearish candlestick patterns
Other bearish candlestick patterns include the bearish belthold, bearish engulfing, bearish harami, bearish harami cross, black marubozu, dark cloud cover, gravestone doji, hanging man, evening star, evening doji star, long black candle, tweezers top, three black crows and the falling three methods.
The Shooting Star and the above patterns may be identified with our candlestick pattern indicator for NinjaTrader 8. Check out the LizardIndicators Premium Section for more information.
