A shooting star is a prevalent candlestick chart pattern in the stock market. Into the market, it is a reversal chart pattern formed on the top of the market at the resistance, its primary work is to reverse the trend of the market.
For the formation of a shooting star, there are many criteria with the help of them we can easily determine the exact location formation of the shooting star, It has unique work in the market.
This candlestick chart pattern forms many times in the market. A newbie trader can easily spot it on the market either he has no experience in the market for trading. This chart pattern is common so that’s why it’s formed many of the time in the market.
In other words, a Shooting Star is a unique chart pattern in the market. Its primary work is to change the momentum of the market. This chart pattern is most useful for technical analysis.
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Formation of shooting star chart pattern in the forex, stock, and crypto market
Why do most traders consider the formation of this candlestick chart pattern? Because there are many conditions to watch out for finding the trade on behalf of the shooting star.
This candlestick chart pattern has a long upper shadow and a more petite body. One thing always keeps in your mind while finding this chart pattern in a live market. It has a long shadow of at least 2x from its real body.
If it has more than 4x shadow than its real body then maybe this chart pattern will work in the market. We know as well as without full confirmation the trade will not go on our side.
This chart pattern will be performed on the resistance. Its primary work is to suspend the uptrend. This chart pattern works well with an uptrend if the market has lack the uptrend then maybe it will work into the market well.
This chart pattern is based on the three candles. If we are going for the take trade on it then we must see the number of the candles and how many candles are formed after and before. It’s look like as falling star from the universe.
How to trade Reversal chart pattern shooting star
It is not a mystery in the stock market. Here we will tell you the method with the help of it you can take the trade on shooting star chart pattern. First of all, you must watch the formation of the chart pattern when it has formed.
After the formation check its body or shadow. It’s fulfilling all conditions for the perfect trade-on candlestick pattern. We know very well it is not a circus so that is why we will wait for the confirmation.
We have recently read that this is three candle combination chart pattern. We must watch low before taking the trade on it. The first candle must be green and close on near its high. The second candle is formed from our candlestick chart pattern shooting star and it has 4x shadow then its body.
After the formation of those candles, we must wait for the third candle and its closing. The candle must be close to the shooting star with its nearest low. Now all conditions have been fulfilled by the market it’s ready to take the trade.
Place an entry order on the third bearish candles low and wait for the target. Don’t forget about sl hit or target hit.
What is the take profit and stop loss of the trade on behalf of the chart pattern?
Now the question arises what is the price for the profit booking or stop loss?
The answer is simple our stop loss is the high of the shooting star with some buffering. Because while placing the stop loss we will consider our risk and reward on that trade.
If we placed the stop loss order on the exact high of the shooting star then the chances are high to hit the stop loss. So that’s why we must place the stop loss with the buffing. You can also place your stop loss on to the last swing high of the market.
Now we will discuss the target because it helps us to become a successful trader in the market. If we are not in the profit then maybe our confidace will hike. So we must have decided our exit as a profitable.
The target is at least 2 times our entry price or last swing high because many times the market has tested its last high and started moving again in an uptrend. So be careful while taking the profit.
If we are riding in the downtrend then we can wait for a long time by trailing our stop loss and opening with the profit side leg. Everything depends on you and how much patience you have. If You Don’t have then you can’t success
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