Shooting Star Reversal Patterns are essential while trading in the stock market. Without knowledge of reversal patterns, we can’t do trade easily. One way in the reversal pattern is named the shooting star, which we will discuss today.
The primary function of this pattern is to reverse the market. It also works to end the trend. It gives a signal well market will start to fall. Always keep one thing in mind while trading in the market. We should never lose our patience and not make any haste.
This pattern is opposite to the Hammer pattern. Whenever a shooting star is forming in the market. The market changes its direction of movement. And the market started moving in that changed direction. We have to keep this in mind while trading shooting stars.
Where is that shooting star performing? The place of its performance is considered well. All things depend on the place of the formation. of the chart pattern shooting star. If it forms on the top and closer to the top then the possibility is high for the reversal.
How To Do The Technical Analysis Of Shooting Star
How should we trade this pattern? Friends, first of all, we must see the place for performing this pattern. Where was this pattern formed, and after that, what happened in the direction of the market? If this pattern is performed on the resistance.
Where did the market go after that? Friends, before trading, we have to check the body of the shooting star that how big its body. And along with the body, we also have to see how long its Shadow is. If the shooting star has a long wick it works well without volatility.
- It should be performed on the top.
- Its Shadow Should be at least twice as long as the body.
- The Shadow below it should be significantly less.
- It should be performed near the resistance.
- The candle ahead of it should not break its high.
- Before this pattern performs, the trend must be an uptrend.
How To Trade
Friends, now it comes to how to take trades on this pattern. First, we must wait for any candle brake the low of the Star. As soon as a candle breaks, it’s low. Then we have to enter. The entry must be on a closed candle below the hammer.
Friends, the most important thing about this pattern is that after its formation. The trend is completely reversed. So this pattern is called a reversal pattern. Inside it, we have to take the entry under the low of Star.
After performing the shooting star, we know that the market has reached its peak point, and from here changes the mood of a falling market. But before doing all this, you should have complete knowledge of technical analysis without technical knowledge we can’t survive for a long time.
After we enter, as soon as it has a low break, where to place the stop loss should also come. If we don’t know how to set our stop loss, then this trade is useless to us. Guys, we have to place our stop loss above the shooting star, and that too with a little buffering. We have to keep our target at least double from where we have entered, and our stop loss is the main thing to place in the market.
How do put the stop loss and target?
Stop loss and targets are very necessary for every trader. Without stop loss or target, we can not survive for a long time in the stock market. Stop loss is a massive capital saver for the trader. Profit does not matter only the stop loss matter.
Profit the way, By this way you can predict you are learning something in the market. By stopping loss, you can learn where are you doing the mistake. In other words, the profit is showing you are rectifying your mistake that is done in the past.
Come on the point is how we can put our stop loss or take profit. We can put our stop loss on the top of the weak of the shooting star chart pattern. While placing the stop loss it has some buffering on the high of the star.
Buffering is very important because many times the market touches the high of the patterns and comes back down without crossing the high of the chart pattern. So that’s why you must put your stop loss on high of the pattern with a little bit of buffering.
Profit is also important for the trader. If the trader is not making a profit constantly then maybe the trader stop trading in the market. Profit a very important part of trading life. If the trader does not book the profit on time then maybe the market will profit from him over again and again.
The trader must book the profit of at least one of each two ratios in a single trade. Because it is necessary. The main place of the book profit is the difference of entry and stop loss of the trading. The difference between high and low is the target of two times.
very informative post, I just started my forex journey and I’m still trying to get the hang of it.
It’s our pleasure to provide a piece of good knowledge about the trading.