Shooting Star & Inverted Hammer Candlestick Patterns: Know Your Charts! with David Moadel
welcome to looking at the markets with David Modell look everybody a shooting
star or is it an inverted hammer hmm well
let's talk about this candlestick formation now shooting stars and
inverted hammers yes a type of candlestick and they both look pretty
much the same in isolation if you're just looking at one candle by itself
it's hard to tell whether it's a shooting star or an inverted hammer
because they both have a small body meaning that the open and the close the
opening price and closing price are pretty close together they're almost the
same and they'll have a large upper wick or shadow and a small or even sometimes
non-existent lower wick or shadow and so that means that the it opened and then
the price action during this period went up up up and then right back down and
closed pretty close to where it opened all right so how do you know whether
it's a shooting star or inverted hammer let's talk about it it depends on the
overall trend of the candles talking about the candlesticks surrounding this
one and where the candle is located that's what it depends on all right so
let's take a look at some examples so I can show you at the top of an uptrend
like this one right here at the top of an uptrend it's a shooting star and it's
considered bearish here's an example of Alcoa a a stock alright so this is a
daily candlestick chart or a piece of one and I took these from
stockcharts.com want to give them credit alright so you have an uptrend clearly
here and then at the very end of the uptrend look at that alright is it a an
inverted hammer or a shooting star well it's at the top of an uptrend and that's
where the uptrend stopped and the price action started going down down down
after that so this would be not an inverted hammer
but a shooting star and you can only know that because of all the surrounding
candles here's another example from Macy's letter M stock alright so up up
up and then here's the end of the trend is it a is an inverted hammer no it's a
shooting star I know that because it's at the top of the uptrend and that's
when you started to see red candles and a reversal here started going down down
down alright so that is a shooting star what about an inverted hammer well if
it's at the bottom of a downtrend it's an inverted hammer and it's considered
bullish here's an example of Home Depot stock see it's down down down some big
red candles here going down and then right at the bottom right went stopped
going down up up and up and right there look at that long upper wick there look
at that smallish body it's not super small but it's small compared to the
wick that's for sure so that would not be a shooting star it would be an
inverted hammer and you'd only know that from the surrounding context the
surrounding candles here here's another example of US Steel ticker symbol X
stock and down down down look at the size of that red candle huh and another
sizable red candle not as big as this one and then this is interesting you
actually have two you get two you get one inverted hammer and then another one
but I'd say this is the more important one because that's the the real
bottoming candle here alright so down down down and then up up up so this
would not be a shooting star it would be an inverted hammer and what's
interesting is a lot of times you won't know which one it is until you have the
benefit of hindsight so you may not know which one it is until afterwards but I
will say this if it's occurring after a big downtrend
then it's not likely to be a shooting star it's more likely to be an inverted
hammer whereas if it's at the end of a big uptrend then it's not likely to be
an inverted hammer it's more likely to be shading star and so sometimes these
are reversal candles and they can be very powerful as we can see after went
down down down a couple of reversal candles here a couple of inverted
hammers and then up up and away all right so I hope that helped you to learn
about those two candlestick patterns and to differentiate between the two that's
important alright my name is David Modell I hope you like this video if you
did please give this video a thumbs up leave comments I love your comments and
subscribe to my channel and hit that Bell on YouTube so you can receive
receive the latest updates on my financial educational videos and you can
email me anytime at David Modell at gmail.com if you want some help putting
together trading plan you have questions about stock charts or how to do research
how to trade how to invest I'm also starting an alerts or signals service
you can ask me about that as well or I can tell people about the trades I'm
making so I do I do the coaching got the alerts service going on lots of ways for
me to help you David Modell at gmail.com that's my email address thanks a lot I
appreciate it and I'll talk to you again really soon