Bearish Shooting Star Pattern

by · December 31, 2009

BEARISH SHOOTING STAR PATTERN (BSSP)
prices may be approaching the peak

Characteristics:
1. Market is on an uptrend;
2. Day 1 has white candlestick;
3. On Day 2, prices then open with a gap creating a small real body at the lower end of the trading range;
4. The upper shadow of the pattern on Day 2 is usually at twice as long as the real body; and
5. Day 2’s pattern has no lower shadow (or close to none).

Brief Explanation:
The BSSP proposed that prices may be approaching the peak, thus the name “shooting star”. The shooting star is a small body distinguished by a long upper shadow which gaps away from the previous real body. This pattern simple tells us that the market opened near its low. The prices then moved down to close near the opening price. The day’s rally was not sustained.

Notes:
1. The color of the body is not important
2. A confirmation on Day 3 is required to ensure that the uptrend has reversed (through a black stick, a large gap down or a lower close).