BQLearning: Significance Of A Shooting Star Candle And Engulfing Patterns
(Source: BloombergQuint)

BQLearning: Significance Of A Shooting Star Candle And Engulfing Patterns

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BQ Learning is a special show that seeks to demystify financial markets, economic theories, legal processes and political structures.

In this series, we explain how technical analysis works; how to identify trading opportunities through it and decode various concepts associated with it.

A shooting star is a bearish candlestick which is the opposite of the hammer candlestick. The price pattern comes with a long upper shadow and a small real body near the day’s low. The distance between the highest price for the day and the opening price must be more than twice as large as the shooting star’s body. The shooting star usually comes after an uptrend.

The Bullish Engulfing Candlestick Pattern is a bullish reversal pattern, usually occurring at the bottom of a downtrend.

A bullish engulfing pattern forms when a small red candlestick is followed the next day by a large green candlestick. The body of the following candlestick completely engulfs the body of the previous day’s candlestick.

On the other hand, a bearish engulfing pattern forms when a small green candlestick is followed the next day by a large red candlestick. Bearish engulfing pattern occurs at the peak of an upward price trend and signals the reversal of the trend.

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