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Shooting Star and Inverted Hammer

By: FX-Strategy Shooting Star and Inverted Hammer (Candlestick Reversal Pattern) The Inverted Hammer develops in a downtrend and after a long black day a new low is formed with the body at the lower end of the range. The upper shadow is normally twice the size of the body, or slightly less, and there is only a small lower shadow. After the long black day price opens below the close of the previous day. Price then rallies but remains below the previous day’s close. This obviously displays the desire to sell rallies, to maintain the downtrend. On the next trading day, if price opens above the body of the Inverted Hammer, it implies short covering and further gains. The Shooting Star develops in an uptrend and after a long white day price opens above the close, rallies to a new high but declines to leave a short body to the low of the day’s range. Normally the upper shadow is two or three times the size of the body and there is almost no upper shadow. An open on the following day below the short body would imply further losses.