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Hammer and shooting star patterns suggest trend reversals from "summary" of Japanese Candlestick Charting Techniques by Steve Nison
The Hammer and Shooting Star patterns are powerful signals that can indicate a potential trend reversal in the market. These patterns are characterized by a small body with a long lower shadow, resembling a hammer or a shooting star. The Hammer pattern forms after a downtrend and suggests that the selling pressure is starting to weaken. The long lower shadow indicates that sellers pushed the price lower during the session, but buyers were able to push it back up, closing near or above the open. This shows that buyers are stepping in to support the price, potentially signaling a reversal in the downtrend. On the other hand, the Shooting Star pattern appears after an uptrend and signifies that the buying pressure is starting to decrease. The long upper shadow indicates that buyers pushed the price higher during the session, but sellers were able to push...
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