Inverted Hammer
vs
Shooting Star

An Inverted Hammer and a Shooting Star candlestick pattern look almost the same, but the only difference is the trend in which they appear

- Inverted Hammer appears in a downtrend
- Shooting Star appears in an uptrend.



Both Inverted Hammer and Shooting Star candlesticks have small bodies, long upper shadows/wicks, and small or no lower shadows/wicks.

Both patterns have similar shapes, but they have different implications for the market.

  1. Inverted Hammer

    The Inverted Hammer forms during a downtrend and suggests a possible trend reversal.

    Its long upper shadow shows that buyers tried to push the price up, but sellers continued to push it down. Eventually, the buyers won and closed the price near the open, indicating that selling pressure has decreased and buyers may take control, potentially leading to a bullish trend reversal.

    • Inverted Hammers pattern must be seen at the bottom of a downtrend.
    • Inverted Hammers can be used as signals for trend reversal and exit signals for short positions.
    • The bottom or close of an Inverted Hammer can be considered as a support line.
    • Inverted Hammers do not provide a specific target, but indicate that traders are interested in reversing the trend.
    • The color of the body of the Inverted Hammer pattern does not matter.
    • The Inverted Hammer pattern fails if the next candlestick achieves a new low.
    • It's important to note that Inverted Hammers are not stronger than regular Hammers.

  2. Shooting Star

    The Shooting Star is a bearish reversal pattern that looks like an Inverted Hammer but occurs during an uptrend.

    Its long upper shadow shows that buyers tried to push the price up, but sellers came in and pushed it down. Since there are no more buyers left, the price goes bearish, indicating a potential trend reversal.

    • Shooting Star is a bearish reversal pattern that must be seen at the top of an uptrend.
    • Shooting Star can be used as signals for trend reversal and exit signals for long positions.
    • The top or high of a Shooting Star can be considered a resistance line.
    • Shooting Star pattern does not provide a specific target, but indicates that traders are interested in reversing the trend.
    • The color of the body of the Shooting Star pattern does not matter.
    • The Shooting Star pattern fails if a new high is achieved by the next candlestick.

Inverted Hammer and Shooting Star patterns can occur frequently in volatile markets, making it difficult to distinguish between true signals and false signals.

Confirmation from the next candlestick is necessary before entering a trade based on these patterns, which means traders need to be patient and wait for confirmation, potentially missing out on some opportunities.

Example-1 : Inverted Hammer

Example-2 : Inverted Hammer

Example-3 : Inverted Hammer

Example-4 : Shooting Star

Example-5 : Shooting Star

Example-6 : Fail of Shooting Star due to Stong uptrend

Example-7 : Shooting Star reversing trend

Example-8 : Shooting Star with Target and Stop loss

Example-9 : Inverted Hammer with spinning Top

Example-10 : Inverted Hammer Target and Stop loss



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