Precursors of a Fall – Shooting Star Patterns

Shooting Star

A shooting star is a candlestick pattern that warns that a market top is in sight, streaking across the night sky like a broom star, heralding bad news for the bulls. The technical significance of this shooting star pattern is not as strong as that of the evening star pattern, and it usually does not constitute a major reversal signal. In the shooting star pattern, the shooting star line has a small real body, and the real body is at the lower end of its price range. At the same time, the upper shadow of the meteor line is longer. Like all star candle lines, the color of the shooting star body can be ignored, but the shooting star visually shows that the market opened near its lowest point for the day, then rose sharply, but finally fell back down, and closed at the opening price nearby. In other words, the rising market during this period represented by this K-line cannot be sustained. 

 In the perfect shooting star line, there is a price gap between the entity of the shooting star line and the entity of the previous K line, and the bearish significance represented by such a shooting star line is relatively large.

K-line chart example of meteor shape

The image below shows a classic shooting star pattern, which occurs in the green area. After it appeared, the market began to fall. It was not until June 4 that a bullish engulfing pattern with strong bullish significance appeared, and the decline was declared complete. 

The figure below shows that there are two shooting star lines on the K-line chart, and behind them, there is a significant market decline process. This shooting star pattern marks the failure of the market to challenge the historical level of the previous high point upwards, and the market outlook will fall again to find the bottom.