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Chapter 9, Part IV. Single Candlestick Patterns. Page 6

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 15, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Shooting Star

    Commander in Pips: Good work. Now about the Shooting Star…

    Pipruit: Shooting Star, very romantic name. I think that this is due to the long upper shadow that reminds me of the tail of a shooting star…
    Commander in Pips: So, Shooting Star could be formed after some up move on the market and its appearance suggests that here could be a top or resistance level. The long upper shadow of Shooting Star suggests that although bulls have tried to push market higher – bears were able to return control and forced buyers back by the end of the trading period.

    We should not trade a Shooting Star (or any other pattern) blindly, but have to wait for some confirmation from further price action – for example, a close below of the open/low price of candle that preceded appearing of Shooting Star pattern, or, at least below the low of the Shooting Star itself.

    We should treat this pattern as failing if the market will close above the high of the Shooting Star.

    Also it’s impossible to say – does a Shooting Star show a long-term top and lead to bearish reversal or indicate just short-term bouncing from resistance.

    Rules of Shooting Star recognition:

    - The long upper shadow – at least 2 times longer (3 times of more is preferable) than the body;

    - Little or no lower shadow;

    - The body is at lower end of the candle (in fact it couldn’t be otherwise, due to previous conditions);

    - The color of the body is not important, but a black Shooting Star is preferable.

    - Shooting Star also could be a Doji with the same properties – for example, Gravestone Doji.
    #2 GBP/USD Weekly – Shooting star and Inversed Hammer:

    Pipruit: Cool! Commander, I see a simple Hammer with a black body two candles left from an inverted hammer. And white candle to the left from Inversed Hammer – is it Hammer or not?​

    Commander in Pips: See, you already can recognize them! Concerning the white candle – I think that this is not the Hammer, because it has too long upper shadow and not enough length of lower shadow.

    Also pay attention to Long-legged Doji that could carry qualities of Hammer pattern – I’ve found one for you. See – the market didn’t close below the low of this candle, so this pattern didn’t fail and then we see some bounce up. Shooting star also looks impressive.

    P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them on the next page and Sive should answer soon.

    Note: FPA ranks are earned in the battles against scam, not in the classroom.
    #1 Sive Morten, Dec 15, 2013
    Lasted edited by : Feb 18, 2016
    Hamza Samiullah and fran alvarez like this.
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