Inverted Hammer / Shooting Star

Simply invert the Hammer pattern and you get the Inverted Hammer and the Shooting Star patterns.

These two candlesticks have the same shape and the only difference is where you find them: the Inverted Hammer is usually located at the end of a downtrend, the Shooting Star instead is found at the end of a uptrend.

Inverted Hammer Shooting star

The Inverted Hammer is a bullish pattern: after a down trend, when the Inverted Hammer fails to push the market down, the bullish reaction is violent.

The Shooting Star is a bearish pattern: the buyers who bought at higher prices are then forced to sell off and create high selling pressure.

How do we trade it?

1. In a downtrend, buy above the Inverted Hammer pattern for a reversal play after bullish confirmation.

2. In a uptrend, sell below the Shooting Star pattern for a reversal play.

-Hammer Trading Example

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