Lim_CH

I have a question on candlesticks. How do you interpret a shooting star candle at the TOP of an uptrend which is immediately followed by a hammer candle the next day. Is the trend then considered bearish (because of the shooting star) or bullish (bcuz of the hammer)? Any one is welcome to contribute your answer :>

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6 people like this.
derenceho :

The candle that forms after the shooting star is what confirms the shooting star candle. The next candle must fail to make a higher high and then proceed to close under the close of the prior candle. This represents the trapped buyers who quickly realize they may have overpaid for the position as the price stops rising. When the second candle closes lower than the prior candle low, it indicates that every buyer on the shooting star candle is now underwater. The tension builds until the proverbial trap door opens. Greed turns into fear as liquidity vaporizes, which in turn causes more panic selling. This can form a new series of falling candles with lower lows, representing a price pullback that could turn into a trend reversal.

Lim_CH :

Reply to @derenceho : Hey, thanks for the detailed answer. So what about the formation of a hammer/hanging man candle right after the shooting star candle? And the price didn't managed to close below the shooting star candle's close. What does it mean then?

joannepang :

If it is a black hammer then indicate weakness
A shooting star must follow by a strong white bar for trend to continue

Lim_CH :

Reply to @joannepang : Hmm change of trend? I think a correction?

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2V_ :

Would prefer Bar chart than candle sticks, the Americans are controllers , Japs are followers now OoL

mrman :

very zimple...itz going to be well supported until the Date of Earning Release...since they already guided for positively... not to forget effect from AEM and also Memtech today cheong new high last hour..

Lim_CH :

Reply to @chiarenjie : Wait for the opportunity haha!

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patricklam :

I think it can be quite hard to day trade stocks due to liquidity issues. Once in a while we can find a stock with liquidity due to certain catalysts but compare to forex is less uncommon. Why i am saying this is because when you are using 1min/15mins/30mins/1hr chart in stocks and using candlesticks doesn't really show if is it time to short sell or buy until the volume is significant for you to do an action.

Overall i will say not to short hi-p as it is a stock in a uptrend counter due to FA, and could burn shortist when it issue a positive profit warning.

LevelUp :

Based on my understanding, if the candlestick today has a small body, it should be considered as a hanging man candlestick rather than a hammer candlestick.
Both looks the same. The only difference is that hammer candlesticks appears at the end of downtrends (i.e. bullish reversal signal), while hanging man candlesticks appear at the end of uptrends (i.e bearish reversal signal).
Just fyi.

Lim_CH :

Reply to @LevelUp : I see. Very interesting pattern.

LevelUp :

I'm assuming we're talking about Hi-P, and here is my novice interpretation:

i) I won't interpret the candlestick yesterday (Oct 16th) as a shooting star as the body is big in relation to upper shadow. But it doesn't really matter as it is still bearish in nature. The relatively higher volume adds significance to the bearish nature.

ii) The second candlestick today (Oct 17th) is a doji, which is basically indecision and as it appears in the uptrend, it may be a potential bearish reversal signal. Volume is not
significant though.

If we add i) and ii), it looks bearish in the very short term. But noted that it is still trending upwards on the moving averages.
If this is TA counter (which seems like it), we can expect a slight pullback before trending upwards again, provided it doesn't break the support from the moving averages.

LevelUp :

Reply to @Lim_CH : Technically neither ... but again I am no candlestick expert.
Not dragonfly doji as the candlestick today has upper shadows.
Not hanging man as the candlestick today has no body

So maybe it's just a normal doji? Let the experts comment ;-)

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neoneo0 :

form a shooting star at major resistance. it is bearish. Hi-p will make a pull back.

Lim_CH :

Reply to @neoneo0 : I see. Thanks for the input :D

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Sporeshare :

Super bearish ! Is better to run road !

Lim_CH :

Reply to @Sporeshare : Haha yes. I was having a dilemma whether to call it a hammer or a hanging man. Both have very different meanings behind. Time to run road liaoz

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