How to Buy Stocks using Shooting Star

A shooting star is a particular pattern that was identified on a candlestick chart.
Below lines help you to identify the shooting star signal and how to take position based on the signal.

How to Identify Shooting Star Signal:

A shooting star signal looks like a inverted “T”. It has a small rectangular-shaped head at the bottom (representing the opening and closing prices of the stock) and a long tail above (representing the highest price during the day).

Meaning:

The shooting star pattern suggests a potential trend reversal in the stock’s price. When it appears after an uptrend, it’s a sign that the stock might start going down.

Sign of Weakness:

The long tail indicates that even though the stock opened at low and there was buying interest, it couldn’t maintain the high price. This shows weakness and potential selling pressure.

Pattern Confirmation:

To confirm the pattern, traders usually wait for the next candle to happen. If the price goes lower than the shooting star’s closing price, it strengthens the direction that the stock might be heading for a decline.

Action to be Taken:

Traders might use this pattern as a signal to sell their stock. It is advisable to put stop-loss order to limit losses.