Shooting Star candlestick pattern is a favorite signal of traders for opening DOWN orders in top fishing transactions. This is a very good price signal for you to learn. In today’s article, I will show you how to identify and use this Japanese candlestick in Fixed Time trading.
Video on how to use the Shooting Star candlestick in trading
What is Shooting Star candlestick?
As the name implies, Shooting Star means to shoot a star. This is a special Japanese candlestick pattern. They usually appear at the top of the candlestick chart. This candlestick is a good signal for you to open profitable DOWN orders.
Characteristics of the Shooting Star candlestick
This candlestick pattern has a very special shape.
– The body is very small and lies towards the bottom of the candle.
– Its wick (shadow, tail) is very long extending towards the top of the candle. It is at least 2 times longer than the body.
– The color of the candlestick body can be green or red.
– The lower wick of the candle is very short or inexistent.
Meaning of the Shooting Star candlestick pattern
The formation of this pattern indicates a price rejection from the sellers. Initially, the price increases sharply. Then the selling pressure weighs down the price, creating a Shooting Star with a long upwards tail and a small body.
This candlestick shape is very similar to the Bearish Pin Bar. These two candlesticks are both reliable signals that signal a downtrend in the future.
How to trade Fixed Time effectively with the Shooting Star candlestick
The Shooting Star candle is a reversal signal candle. This means that when the market is in an uptrend, the price creates a Shooting Star candlestick indicating a downtrend in the future. Applying this price habit, you can open DOWN orders safely.
Combine it with Resistance
Levels are where prices always have special reactions. If the price forms a Shooting Star candlestick at the resistance level, the possibility of price turning back is very high. You can open orders based on this signal.
Conditions: A 5-minute Japanese candlestick chart. Identify the resistance of the price. Open orders with an expiration time of 15 minutes.
How to open an order:
+ Open DOWN orders when the price hits the resistance zone and creates a Shooting Star candle.
Combine with the RSI indicator
The RSI trend indicator is a good signal to predict market peaks and troughs. In this strategy, when the RSI is in the overbought zone, the market is making a top. When the price creates a Shooting Star candle, a downtrend is likely to occur. Open an order right at this time.
Conditions: A 5-minute Japanese candlestick chart. The RSI (14) indicator. Open orders with an expiration time of 15 minutes.
How to open an order:
+ Open DOWN orders when the RSI indicator is in the overbought (70) zone and the Shooting Star candle appears.
Notes when using Shooting Star candles in trading
– We should combine it with other signals of the market to increase the winning rate for trading.
– When the market has news, limit trading. Special candlestick patterns like Pin Bar or Shooting Star are sometimes indicative of strong price movements due to news.
The Shooting Star candle is a good signal, used by a large number of traders. If you want to use it in trading, let’s get familiar with it first on a DEMO account for at least 2 weeks.