Inverted Hammer and Shooting Star Candles

Inverted hammer candlesticks & shooting star candlesticks look alike. These candlesticks have a long upper shadow & a short body at the bottom. Their color does not matter. What matters is where they form if at the top of a trend (star) or bottom of market trend (hammer).

The difference between the two is that inverted hammer candle is a bullish reversal pattern while shooting star candlestick is a bearish reversal pattern.

Upwards Trend Reversal - Shooting Star CandlesDownwards Trend Reversal - Inverted Hammer Candles

Inverted Hammer & Shooting Star Japanese Candlesticks

Inverted Hammer Japanese Candle

The Inverted Hammer candlestick is a bullish reversal candlestick pattern. It forms at the bottom of a Gold price downwards trend.Inverted hammer candle occurs at the bottom of a downtrend & indicates the possibility of reversal of the downwards Gold price trend.

Inverted Hammer Candle Pattern

Technical Analysis of Inverted Hammer Candle

A buy signal generated using the inverted hammer candlestick setup is confirmed when another candlestick is formed & this new candlestick closes above the neck line, this is the opening of candlestick on the left side of this hammer candle as shown above. The neck line in this case is a resistance area.

If the candlestick formed next to the hammer candle does not close above the neck-line, then as a trader you wait to see if the subsequent candlestick closes above the neck line. Only when a candlestick that closes above the neck line is formed is when this bullish reversal pattern is confirmed.

Stop orders for the buy trade that has been opened should be placed a couple of pips below the lowest price on the recent low.

An inverted hammer candlestick is named so because it signifies that the market price is hammering out a bottom.

Shooting Star Japanese Candlestick

The Shooting Star candle is a bearish reversal candlestick pattern. It occurs at the top of an upward trending market.Shooting Star candlestick occurs at the top of an up trend where the open price of XAUUSD is the same as the low - meaning the price opened at that point rallied up but was pushed back down to close near the same opening price.

Shooting Star Candlestick Pattern

Technical Analysis of Shooting Star Candle

A sell signal generated using the shooting star candlestick pattern is confirmed when a new candlestick closes below the neckline: this is the opening of the candlestick on the left side of the shooting star candlestick as shown on the example above. The neck-line in this case is a support level.Stop orders for the sell trades opened using this setup should be placed a couple of pips above the highest price in the recent high.

The Shooting Star candle is named so because it is formed at the top of an upwards Gold market trend - this candlestick pattern setup resembles a shooting star up in the sky thus it name - shooting star.

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Trade Gold Trading

Inverted Hammer and Shooting Star Candles

Inverted Hammer Japanese Candle

Technical Analysis of Inverted Hammer Candle

Shooting Star Japanese Candlestick

Technical Analysis of Shooting Star Candle