The Shooting Star is nothing new but a variation of the Hammer. It is an inverted hammer to be more precise.

So, a Shooting star at the top of an uptrend will indicate that the bulls are running out of steam and the sellers are taking over. The long upper shadow displays the buyers’ intention to pull prices higher in the direction of the established trend but unfortunately for them, the market rejects the high prices as the sellers take over and push prices to close way lower.

Now, let’s take a look at the specifications of the Shooting Star:

1. It has a long upper shadow, 2-3 times the size of the body.
2. The color of the body is not important in this case.
3. It has a tiny or no lower shadow at all.
4. The body is small

Great!

Now, a potential sell setup may be in place at the top of an uptrend or near a resistance area, and a sell order is seen right below the low price of the candle. Of course, a protective stop loss is always recommended to protect our capital. This time the stop loss may be in place right above the high price of the Shooting Star.

Stay tuned for more!