The shooting star candlestick strategy explore a minor downtrend reversal pattern candlestick looks similar to a hammer reversal. Among price action traders, the shooting star is also known as the Pin Bar and it has some special price features. This makes it a very dangerous pattern, if it develops in the right place.
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Once you understand what is a copy trade , you will understand why a candlestick pattern has such power to signal a reversal of an uptrend. Very few people are good at trading reversals. In fact, most traders do it so badly that they burn their accounts.
The best copy strategies will cover this and will show you how to catch a falling knife without severing our fingers. The shooting star candlestick pattern can help you on how to spot a top in the market and how to trade it properly.
First of all, let’s go over some basics:
Star Star Candlestick Pattern – Definition
A shooting star is a bearish reversal chart pattern characterized by a long upper wick, little or no lower wick, and a small body. In technical analysis, a copy pin bar is made up of a single candle.
Inverse hammer stars are only reliable when they occur at the end of an uptrend.
The image below is a good representation of the Star Star candlestick pattern:
Depending on your chart settings, the real body of the inverse hammer can be green (bullish) or red (decrement). However, the shooting star is more bearish because the closing price is lower than the opening price.
Another feature of the discount shooting star is that the wick needs to be at least 2-3 times the body size.
This is how the actual shooting star pattern looks like on a candlestick chart:
To understand exactly the bulls and bears fighting behind the shooting star pattern, consider this candlestick pattern in detail.
See below:
Psychology behind shooting star
Who is in control?
The bulls? Or Bear?
Initially, the bulls are in control as the prevailing uptrend continues to maintain the movement. The bulls push the price to new highs. Once the bulls reach the climax and hit the candle top, everything looks bullish.
However, at this stage, the bears enter the market and fight back. They succeeded in breaking through the bulls and pushed the price lower than the opening price.
In the event of a falling shooting star, the closing price will be lower than the opening price and near the low of the bar. And, in the case of a bullish shooting star, the closing price will be above, but close to, the opening price, within close proximity.
The ability of an inverse hammer to close the candle below the opening price gives the bearish shooting star more power to reverse the current uptrend.
What is Star Star Trading?
We need to train our eyes to read the sentiment of the hammer candle, considering the whole market environment. It is useless to try to determine the exact textbook shooting star.
If you don’t have an uptrend before the inverted hammer, it’s not a tradable candlestick pattern. In this scenario, the copy transaction will fail.
The shooting star candle is confirmed only once we break below the low of the candle. But depending on your risk profile, you should always seek confirmation from other sources to validate transactions.
We do not recommend being an active trader when trading the snapshot chart patterns.
You can backtest different types of entry strategies, but keep in mind that the more confluence points you use, the more likely price can move from the ideal entry price.
Now, before we outline the rules of the best shooting star strategy.We always recommend you get a piece of paper and pen and write down these rules.
For this rally, we will be looking at the bearish shooting star or the inverted hammer.
Candlestick star shooting strategy
The shooting star candlestick strategy is a very simple but very effective method to trade the financial markets. You can trade stocks, Forex, currencies, commodities, futures and even cryptocurrencies in different timeframes.
The types of trade setups that we will recommend through this reversal trading strategy have an amazingly high success rate. However, the only downside is that they will only show up on your Forex candlestick chart once in a while.
Let’s start and get our feet wet.
Step #1: Attach the Chaikin Money Flow Indicator on your Preferred Timeframe
Start first by getting your chart ready for battle. Simply attach the Chaikin Money Flow indicator on your favorite timeframe. This is the only additional technical tool we will use to validate the discount shooting star pattern.
Using the CMF indicator, we do one important thing.
The bearish shooting star effect will be confirmed or invalidated immediately as soon as a bearish inverse hammer develops on our Bitcoin candlestick chart. This means that the price will not move further from the ideal entry price.
Now let’s focus on the price action.
See below:
Step #2: The star candle will appear after a strong uptrend
The position, or where the shooting star candle develops, matters a lot.
This whole component is what makes the bearish shooting star candle execute with such precision. We need a strong uptrend that has two important features:
The first part of the trend is a slow and steady move upwards
The last part of the uptrend, before the shooting star candle, needs to be more volatile.
Basically, we are looking for a full-blown market where the bulls burn out and peak.
Now let’s zoom in on the chart and see if the inverted hammer satisfies all the requirements.
See below:
Step #3: The CMF indicator should be below 0 line after the bearish copy candle develops
Chaikin Money Flow is a great tool to read and measure institutional cumulative distribution in any market. Essentially, a CMF reading below the zero line shows that sellers have the upper hand and they are in control of the market.
Note that the discount capture star detects all the requirements of the discount inverse hammer. The balls are at least twice longer than the body, the body is small, and the lower balls are very little. This candle will be stronger if the closing price is lower than the opening price.
But it is still a good model to trade due to all the other features.
Now, it’s time to highlight how to find the right entry point for the bearish shooting star candle.
See below:
Step #4: Sell once we break the low of the Shooting Star Candle
Just place a limit sell order below the low of the shooting star. There is nothing complicated about our entry strategy. It conforms to the textbook rule.
What is the ideal place to hide your protective stop? Should you exit a profitable trade when trading shooting candlesticks?
See below:
Step #5: Hide the SL above the high of the Shooting Star Candle. TP when we enter the slow part of the prevailing trend.
Just hide your protection SL on the high level of the copy pattern. You can add a buffer of a few pips if you want to guard against possible false breakouts.
The full top creates the necessary space where the bears will find no support to stop the drop. The final phase of a trend is always more volatile. When combined with the reverse shooting star pattern, it makes for a killer trading strategy.
In this regard when the price reaches the part where the current uptrend is moving slowly, we are in profit. That’s where price will find some hostility to head further to the downside. We want to remove our location when that happens.
Conclusion – Best Copy Strategy
The best copy strategy is one of the most reliable and effective ways to reverse a trade trend. This single candlestick pattern can offer you one of the most risky reward ratio . You can risk between 10 and 30 pips and expect to get between 200 and 300 pips, this gives you 20x or 30x your risk.
Consider that next time you can find a shooting star candle that satisfies all the rules outlined in this trading strategy guide.
A lot of traders will warn you against reverse trading. However, finding tops in the market and reversing trades can be done successfully if you have a proven method like our copy candle strategy.