Inverted Hammer and Shooting Star Candles

Inverted hammer candlesticks & shooting star candles look alike. These candlesticks have a long upper shadow & a short body at the bottom. Their color doesn't 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 market reversal pattern while shooting star candle is a bearish price reversal trade 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 candle is a bullish market reversal candle pattern. It forms at the bottom of a Gold price downwards trend.Inverted hammer candle occurs at the bottom of a downtrend & shows the possibility of reversal of the downwards Gold price trend.

Inverted Hammer Candlestick Pattern

Trading Analysis of the Inverted Hammer Candle

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

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

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

An inverted hammer candle is called & named so because it signifies that the market is hammering out a bottom.

Shooting Star Japanese Candlestick

The Shooting Star candle is a bearish price reversal candlestick pattern. It occurs at the top of an upward trending market.Shooting Star candle 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 level rallied up but was forced back down to close near the same opening price level.

Shooting Star Candle Pattern

Trading Analysis of the Shooting Star Candlestick

A sell signal generated using the shooting star candle pattern is confirmed when a new candle closes below the neckline: this is the opening of the candlestick on the left side of the shooting star candle as shown in the example revealed 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 called and named so because it is formed at the top of an upwards Gold market trend - this candle pattern formation looks like 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

Trading Analysis of the Inverted Hammer Candle

Shooting Star Japanese Candlestick

Trading Analysis of the Shooting Star Candlestick