I think it would be more logical to display an inverted hammer underneath the word inverted hammer and a shooting star under the shooting star instead of the other-way around in the “Forex School”. This should help avoid confusion.
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In fact, whether the candlestick body is black or white in this case does not change the name of the candlestick - it is the context that determines the name.
Its only an Inverted Hammer because it is found at the bottom of a downtrend, whether its black or white. Vice versa for the Shooting Star - its only a Shooting Star when its found at the top of an uptrend, again, whether its black or white. (Of course, you can only see whether its a top or bottom after at least one more candle.)
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Thanks for the clarification @tommor. It does indeed make sense that they can both be filled or unfilled.
Yeh. And do yourself a favor: go take a look at some live charts and see how many times price behaves in that exact fashion as shown in those cherry picked examples. You will be surprised I assure you.
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PS:
Caution. These are well known candlestick patterns but they’re only recognised as meaningful and given distinct names and accepted as effective because of chart observations in the long ago past - which was not done on forex.
So for us forex traders, some of these patterns aren’t quite as good as they are in the respected textbooks and they don’t behave quite as well as they should. Part of that is because the patterns are technically incomplete in forex charts. For example, these bars should ideally show gaps between the previous day’s close and the open. As we’re in forex and the markets trade 24 hours Monday-Friday, that can’t happen. so these things might not be quite as good indicators as we think they should be.
On top of that, Thomas Bulkowski (see thepatternsite.com) actually says the Shooting Star can be a bullish continuation pattern, based on his statistical research - though even that wasn’t done in forex!
Just don’t take everything you read as literal truth, no matter who wrote it.
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Thanks for the advice. I am aware that nothing is certain and one shouldn’t rely on one indicator solely. Furthermore R:R is definitely important. Thanks for the link to Thomas Bulkowski his site. I will check out his research once I’ve finished the academy.
Coming September I am also starting a masters degree in quantative finance, will be interesting to see how what I will learn there compares to what is available online.
You should use with support line, resistant line or demand/supply zone.
Ofcourse. I don’t think it is wise to trade using solely one indicator orso.