Expertise needed: Discriminating Shooting Star?

Hello

These 2 pictures depict shooting star setup. Any idea how i could descriminate or filters some that as greater risk to fail

On each situation, shooting start did touch the upper band of the channel.

Any input appreciated

Martin

just one of them is a shooting star (first picture first marked bar)
the other two are no shooting stars that might be the problem

In my experience, the following factors can increase the probability of a hammer or shooting star signaling a 'decent' reversal:

 

1. Longer timeframes tend to be more reliable.
   
2. The more overbought/sold price is (i.e. the further outside the Bollinger band, or the more mature the move is).
   
3. The longer the upper wick (for a shooting star), relative to the candle body.
   
4. If price is currently in an area of previous supply/demand (i.e. a S/R zone).
   
5. If the hammer/shooting star is backed by a trend in a longer timeframe, i.e. it signals a possible resumption of this trend, following a decent sized pullback.
   
6. A sharp increase in volume on the shooting star, and the candle(s) immediately following (especially on shorter TFs e.g. M15, M30).

Sometimes it's best to wait for confirmation of a directional change in the next candle, e.g. wait until the low of the shooting star has been broken before entering.

[EDIT] You might like to check out the James16 thread. Jim and his followers are very experienced at trading hammers/shooting stars (they call them 'pin bars').

Hello rvoiz

Thanks for your input.
What is your definition of a shooting star? Maybe i could change mine

Martin

the upper shadow has to be min twice as high as the real body and the lower shadow less than 10 % of the real body

none of them are shooting stars, it has to appear at the end of an uptrend, like in picture 2, but as rvoiz said, the upper shadow also needs to be twice as high as the body


http://www.trending123.com/patterns/...t-Pattern.html

http://thepatternsite.com/ShootingStar2.html
http://thepatternsite.com/ShootingStar.html

http://www.candlesticker.com/Cs42.asp


http://stockcharts.com/help/data/med...dshooting2.gif

first picture:

The spinning tops before the three up - three down formation flatten against resistance, making the idea of resistance pliable.
Then, the three up - three down formation -- that is, the three big-bodied same-color candles up and same of opposite color down -- remove that resistance and challenge any other with their double reverse (see 3,4,7).
Finally, the two candles with big, same-sized, opposite-color bodies break the upper, weak resistance and continue the character of opposing candles in the last formation.
Your shooting stars just kind of get in the way, floundering in the path of the other two. I admit they do both reduce the trend's angle a bit, with a row of spinning tops (not shown) with a similar purpose later on, and continue the nature of the run, that of candles of opposite meaning trapping the run's energy into the same upward direction.


second picture:

patterns -- Before the shooting star is five same-colored candles of decent body size. They run up, the last the biggest and the one to break a decent resistance line: Right there, you have lots of energy for the shooting star to react against.

trends -- At first (left side of the chart), there are simple, multiple-candle, same-color runs, a1 up and a2 down.
Then, at b 1,2 and 3, every other candle vies against the first one, so that when one wins, the downtrend continues, and when there's a tie then there's at least an implied fast up and down.
Finally, there's an up with multiple candles of the same color of decent body size; this up wanders until it breaks a decent resistance, at which point its body enlargens dramatically.

Because the habit of this area is to even every or every other candle with a candle of the opposite color and thus direction, the shooting star works perfectly to reverse the perfect up candles with just as perfect down candles.



Of the two charts, I like the first better: A forty-five degree run, no matter how jumbled along the way, is nice.

hardcore chartist, alright

Thank you.

Yeah, I wouldn't follow my words exactly, either. It's to encourage others to get that deep into the chart, because the chart rewards you exactly in turn.

Such a study isn't practical, most of the time.
And even if it's good, some other chart area may supercede it and SL the trade when you leave the immediate area of study.

I usually try and find one small feature, such as that up-and-down in the 'failed' chart, to explain in detail and then coax it to produce TL's or such that explain as big an area as I can get.
Not that it's really worked yet....

It might help to think of starting with the candle stick pattern (which could be considered be an entry signal) as bottom-up approach.

So, conversely, a top-down approach would involve observing the structure of price on a higher time frame (or from a longer term perspective) to determine the best places to enter long or short. Then you look at whatever specific entry signal you prefer on the smaller time frame (or immediate perspective).

There are a million ways to look at the market from top down, just find a way of defining market structure that rings true with you , as well as a specific entry signal (like a candlestick patter in your example).

I prefer using supply and demand zones (see trading supply and demand zones in the trading discussion forum) for my big-picture market structure (and intermediate structure) while using VSA for my specific entry points (see VSA with malcolmb in the interactive trading section).

Thanks many time guys
Very interesting
Great informations


Martin