Written and copyright © 2008-2013 by Thomas N. Bulkowski. All rights reserved.
In my book,
Encyclopedia of Candlestick Charts, pictured on the right,
I explore the entire range of candlestick patterns from abandoned babies to windows (not exactly A to Z, but you get the idea), in both bull and bear markets, using almost 5 million candle lines
in the tests.
The book takes an in-depth look at 103 candlestick patterns and reports on behavior and rank (3 types: reversal rate, frequency, and overall performance), identification guidelines,
performance statistics (tables of general statistics, height, and volume), trading tactics (tables of statistics on reversal rates and performance indicators),
and wraps each chapter with a sample trade. I share a sliver of that information below. If you like what you read here, then you will love the book. Help support this website and buy a copy
by clicking on the above link.
The shooting star candlestick comes in two varieties, a single candle line and a two line candle. This page discusses the one candle line. In an uptrend, a small body candle appears with
a tall upper shadow and no lower one (or a very small one). The candle looks like a gravestone doji but it is not a doji because the opening and closing
prices are not the same.
The candle looks as if price has reversed direction. Examining the performance statistics confirms that the shooting star acts as a reversal 59% of the
time. However, I still consider that "near random" performance. Thus, although price reverses more often than not, do not depend on that happening.
Shooting Star: Important Results
Theoretical performance: Bearish reversal
Tested performance: Bearish reversal 59% of the time
Frequency rank: 37
Overall performance rank: 55
Best percentage meeting price target: 84% (bear market, down breakout)
Best average move in 10 days: 3.86% (bear market, up breakout)
Best 10-day performance rank: 46 (bull market, up breakout)
All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.
The above numbers are based on hundreds of perfect trades. See the glossary for definitions.
Shooting Star: Discussion
Day traders that I know depend on the shooting star more often than I think they should, but my statistics are based on the daily charts, not intra day ones. I found that the shooting
star candle acts as a bearish reversal 59% of the time. I consider that "near random" performance.
The overall performance is a mid list 55, where 1 is best and 103 is worst.
The best average move 10 days after the breakout belongs to shooting stars after an upward breakout in a bear market. Price rises an average of 3.86%. I consider moves of 6%
or more to be good, so the shooting star falls well short. The numbers suggest that this candle looks better than it performs.
Shooting Star: Identification Guidelines
|Number of candle lines||One.|
|Price trend leading to the pattern||Upward.|
|Configuration||Look for a small bodied candle (but not a doji) with little or no lower shadow and a tall upper shadow at least twice the height of the body.|
Shooting Star: Three Trading Tidbits
If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book
where the tips appear.
- Shooting star candles that appear within a third of the yearly low perform best -- page 663.
- For the best performance, select shooting star candles as part of an upward retracement in a downward price trend -- page 664-665.
- Shooting stars within a third of the yearly low frequently act as reversals -- page 665.
Shooting Star: Example
Pictured in the daily chart at A is an example of a shooting star that appears as part of a retrace in a downward price trend. Unfortunately, the
downward trend is not a long one, so this is not a perfect example.
Price moves down from the highest peak on the chart, bottoms, and then bounces. A shooting star with a tall upper shadow, no lower one, and a small body appears. The shooting star
signals a change in momentum from up to down with the bulls forcing price to a peak but the bears battling back so that price closes near where it opens. The next day, and in the coming
days, price moves lower.
This is an example of how a shooting star is supposed to work. With the close near the low, it should not take much
for price to breakout downward (a close below the bottom of the candlestick) and yet it does so only 59% of the time.
-- Thomas Bulkowski
Other Shooting Star Examples
Copyright © 2008-2013 by Thomas N. Bulkowski. All rights reserved. Practice safe lunch: Use a condiment.