Figure 1. Two-Candle Shooting Star pattern.
This article is devoted to the Two-Candle Shooting Star two-line pattern.
The first line of the pattern is a candle with a white body appearing as a long line. It can be one of the following candles: White Candle, Long White Candle, White Marubozu, Opening White Marubozu, Closing White Marubozu. Candles being spinning tops, even with white bodies, cannot appear on the first line.
The second candle can be either a white or a black spinning top appearing both as a long or a short line. It can be one of the following candle: White Spinning Top, Black Spinning Top, High Wave. The lower shadow does not exist or is shorter than the body. The upper shadow needs to be at least 2.5 times longer than the body.
The pattern appears in an uptrend, predicting its reversal. It has to be confirmed in the form of breaking out of a nearest support zone or a trendline.
The Two-Candle Shooting Star can be a part of the Evening Star, being a three-line pattern. In such case, it reinforces the forecast of the Two-Candle Shooting Star.
Figure 2. The figure presents a Rising Window and a Two-Candle Shooting Star patterns, sharing a joint line (being a High Wave basic candle). The first pattern is a bullish continuation whereas the second one is a bullish reversal. This example explains why a pattern should never be interpreted as an isolated entity. In other words, a pattern appearance is not an equivalent of the signal. A pattern may be a signal, but requires confirmation on the following candles. During analysis, we should remember, that we do not know the future hence we can use only information from the past (i.e. left side of the chart).
There are two resistance areas on the chart. The first one, located higher, was formed at the end of August and mid of September, when the market reached new maximums. The second resistance area is formed by Black Candles.
Appearance of the Rising Window is an attempt at breaking out of the lower resistance zone. Then, however, the Two Candle Shooting Star is formed. At that point, both directions are opened. A White Spinning Top, following patterns, confirms the Rising Window eventually. Also, a local support area is created.
Shortly after patterns appeared, the market had to face the upper resistance zone, and a Bearish Engulfing pattern is formed. Price is undecided, so it moves sideways for over a month, bouncing between the upper resistance region and the local support zone. Finally, a Long Black Candle tried to break out of this congestion area downward. The attempt was unsuccessful, and on the chart two bullish reversal patterns are formed: Homing Pigeon and Tweezers Bottom. The bulls managed to break out of the resistance region, after all.
Figure 3. A Two-Candle Shooting Star which the first line is a Long White Candle, formed at a high volume. Such white candle creates a strong support zone although the pattern itself is bearish. This combination, i.e. the Long White Candle and the bearish reversal Two Candle Shooting Star brought consternation on the market.
The bears, however, step by step are moving prices down, although the support area works for a while. Shortly after the Two-Candle Shooting Star appears, two more bearish patterns are formed: a Bearish Engulfing and a Three Outside Down. The appearance of a Black Candle, created at a high trading volume, is followed by a price drop.
This example shows that although the appearance of a Long White Candle, a Two-Candle Shooting Star turned the market down. The second line of the pattern continued initially the price increase but was not able to keep new maximums.
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