Understanding Bearish Gravestone Doji and Shooting Star - Single Candlestick Patterns

Single Candlestick Patterns

Bearish Candle Stick Patterns: Indicates the end of an uptrend and start of the downtrend. These candlesticks are very strong when they are formed near the resistance line.

There are two types of Bearish candlestick patterns :

1. Gravestone Doji
2. Shooting Star

The bearish hanging man is a single candlestick, and a top reversal pattern. A hanging man signals a market high. The hanging man is classified as a hanging man only if is preceded by an uptrend. Since the hanging man is seen after a high, the bearish hanging man pattern signals selling pressure.
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          Gravestone Doji                                                           Shooting Star                                                                                

A hanging man can be of any color and it does not really matter as long as it qualifies ‘the shadow to real body’ ratio. The prior trend for the hanging man should be an uptrend

        Points to consider for recognizing this pattern -

1. There must be a preceding uptrend
2. It looks like an inverted T letter
3. The closing and opening price almost near or same
4. The real body may not exist or can be green or red
5. It has no or little lower shadow
6. The upper shadow is at least twice of the length of the real body.

What is the Psychology behind?

1. The bulls continuously push the price up resulting in a long upper shadow
2. The bears fight back strongly and defeat the bulls by dragging the price below or near the opening level, forming a square-like body (i.e. Shooting star)
3. The longer the upper shadow the more effective the bearish signal.
4. The next candle has to close below the low of the shooting star to confirm the existence of bearish force.

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