Hammers and Shooting Stars
An application of long shadows is the hammer and the shooting star. When a candle with a long lower shadow forms in a down trending market, it is called a hammer. A hammer is a reversal signal from down trend to up trend. Do not confuse this with a candlestick with a long lower shadow formed in an up trend. The hammer pattern is only effective when it appears in a down trend.
Conversely, when a candle with a long upper shadow forms in an up trend, it is a called a shooting star. A shooting star is a reversal signal from up trend to down trend.
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