WEBVTT 00:02.860 --> 00:07.540 In this video we're taking a look an inverted hammer in shooting star patterns. 00:07.540 --> 00:14.010 This is one of my favorite candlestick patterns because it is easy to understand. 00:14.080 --> 00:21.970 It has a small body or perhaps even no body an unchanged open a close if you will. 00:21.970 --> 00:23.450 It normally has. 00:23.800 --> 00:27.940 It normally has a little bit of a stub underneath but it doesn't have to. 00:27.940 --> 00:30.850 We can not break down at all. 00:30.850 --> 00:37.690 And then you get the long wick to the upside and the difference between a shooting star and an inverted 00:37.690 --> 00:39.580 Hammer is simply where it plays. 00:39.600 --> 00:43.870 If it's at the top of an uptrend then it's a shooting star. 00:43.870 --> 00:47.890 It's supposed to be a star streaking across the night sky falling to earth. 00:47.890 --> 00:53.490 So of course it's a bearish sign it's at the bottom of a downtrend it's an inverted hammer because well 00:53.590 --> 00:55.940 it looks like a hammer but upside down. 00:55.960 --> 00:59.090 Think about what these candlesticks mean. 00:59.140 --> 01:04.000 Remember it's all about psychology of candlesticks it's what tells us what's going on. 01:04.030 --> 01:08.840 So you know you have your colored in Candlestick and it doesn't matter the color. 01:09.020 --> 01:17.640 Well how did this day play out you can see that the sellers came in but the buyers came in in a strong 01:17.640 --> 01:20.100 move to the upside but eventually failed. 01:20.130 --> 01:25.160 So think about all of the people that are trapped in this trade along this week. 01:25.150 --> 01:29.070 They're in trouble if price goes against them. 01:29.100 --> 01:37.900 So at the top of a Down are at the top of a uptrend you can see that we have rallied and then failed 01:37.900 --> 01:39.550 to confirm the rally. 01:39.550 --> 01:44.830 And once we break down below the bottom of the stick everybody here is losing. 01:44.920 --> 01:51.520 So of course they have to turn around and sell their stock to close out their position so it becomes 01:52.030 --> 01:53.470 a bit self-fulfilling. 01:53.470 --> 01:59.740 You know if you're trading in a day that looks like this and you know so you buy here and things look 01:59.740 --> 02:04.150 really good for most of the day and suddenly you're losing money in the next day you wake up and you're 02:04.150 --> 02:07.940 losing money even even a quicker manner. 02:07.960 --> 02:13.320 You're going to get upset and you're going to get out of the market so then tell the Shooting Star works. 02:13.520 --> 02:20.080 Now the inverted hammer kind of the same thing but ironically the exact opposite. 02:20.080 --> 02:23.190 And what I mean by that is you know same candlestick pattern. 02:24.190 --> 02:27.130 But it's at the bottom of a downtrend. 02:27.130 --> 02:33.760 So what you're seeing here is you know sellers are coming in and they're pushing prices lower. 02:33.770 --> 02:37.600 Well what happens if you get in this candlestick. 02:37.730 --> 02:45.590 You know some time during this day and you know it goes against you a little bit but you close out the 02:45.590 --> 02:46.640 day and you feel pretty good. 02:46.640 --> 02:52.500 You think OK find the downtrend continuing you know what does this mean. 02:52.510 --> 02:56.290 Well this can mean a lot of different things if it breaks down below the bottom. 02:56.290 --> 02:58.050 It's a simple continuation. 02:58.050 --> 03:03.420 You can see that the buyers had trying to push prices higher but failed. 03:03.550 --> 03:05.920 So that is what you would expect. 03:05.950 --> 03:10.820 So this day being in the middle of a move lower might look something like that. 03:11.050 --> 03:12.340 And then we drift even further. 03:12.340 --> 03:12.570 OK. 03:12.580 --> 03:14.380 That's fine that's great. 03:14.380 --> 03:17.350 But what happens if you have this day. 03:17.360 --> 03:24.550 You you start shorting them somewhere around here and it goes against you lower but you're in profit. 03:25.180 --> 03:31.070 Well what happens at the next day looks something like this. 03:31.160 --> 03:32.710 This is a positive candlestick. 03:33.500 --> 03:39.740 Well you got a problem because not only are you losing money but everybody who shorted that day or the 03:39.920 --> 03:42.790 hour whatever it is is now losing money as well. 03:42.800 --> 03:45.320 And that's a breach of major resistance. 03:45.410 --> 03:46.490 That's an inverted hammer. 03:46.490 --> 03:55.530 So think of it this way in a sense these are basically dodges because what you're waiting for is a break 03:56.680 --> 04:00.400 in one direction or the other of this massive move. 04:00.610 --> 04:03.960 If we break down it shows bearish pressure. 04:03.970 --> 04:07.780 Well if you're in a downtrend that's fine but if you're an upturn that's a problem. 04:07.870 --> 04:11.170 If we break above there it shows bullish pressure 04:13.990 --> 04:19.190 and remember you know failed candlesticks can be a signal in and of itself. 04:19.360 --> 04:23.650 You know at this point really what you're paying attention to is resistance and support their support 04:23.650 --> 04:24.520 underneath. 04:24.700 --> 04:31.810 There is resistance above and if the support gets broken and that's bearish the resistance gets broken. 04:31.810 --> 04:32.410 That's bullish. 04:32.410 --> 04:33.970 That's really how you need to look at this. 04:33.970 --> 04:35.320 Just think about the psychology. 04:35.320 --> 04:39.670 Think about what the line graph looks like for that our day five minutes whatever. 04:39.670 --> 04:46.790 Now obviously on a higher timeframes these candlesticks mean more and they also mean more if accompanied 04:46.790 --> 04:51.370 by a support and resistance level that matters on the chart. 04:53.140 --> 04:55.140 So let's take a look at a couple of examples. 04:57.130 --> 05:00.760 Right here we had a strong labour hire. 05:00.860 --> 05:10.700 We formed a shooting star broke below it and you can see that was the beginning of a move lower. 05:10.760 --> 05:15.520 And speaking of failed candlesticks you can see that this hammer caused a little bit of a rally. 05:15.530 --> 05:19.540 But once you break down below that hammer that's a very negative sign. 05:19.550 --> 05:20.630 That's a broken candlestick. 05:20.630 --> 05:25.420 That's another broken candlestick so you can see that we just came back to fill the gap. 05:25.430 --> 05:31.230 Now these are one our candlesticks but this would be the same daily five minutes doesn't matter. 05:31.340 --> 05:34.720 Here's another shooting star that almost got broken to the upside but it didn't. 05:34.730 --> 05:35.970 So you had a shooting star. 05:35.990 --> 05:39.670 First sign of trouble then this massive bear scandal. 05:39.710 --> 05:40.810 Another sign of trouble. 05:40.850 --> 05:48.680 And we turn things around now as I record this the Friday session formed on the early chart an inverted 05:48.680 --> 05:49.040 hammer. 05:49.040 --> 05:51.010 And we have broken above it. 05:51.050 --> 05:56.810 That's a pretty bullish sign that shows a perhaps the downtrend over the last couple of days is ending. 05:56.810 --> 06:03.450 Buyers are stepping in and more importantly short sellers are covering I cannot stress this enough. 06:03.460 --> 06:09.340 You want to trade with the trend but you also want to trade it's important resistance and you want to 06:09.520 --> 06:15.550 think about what the players involved in the market are experiencing because that's ultimately what 06:15.550 --> 06:16.300 drives the market. 06:16.900 --> 06:22.750 Here's a candlestick that is interesting because it's at the bottom of a downtrend. 06:22.750 --> 06:25.580 It's not at the very bottom where you really want to see it. 06:25.810 --> 06:31.720 But once you gap above this this attempt to push this market down you can see that we went much higher 06:33.020 --> 06:37.920 and why won't because everybody who shorted in that candlestick is losing money. 06:38.000 --> 06:40.570 Think about people that are trapped and take advantage of it. 06:40.580 --> 06:43.640 That's really what trading is because you need that momentum. 06:43.640 --> 06:49.130 They've got to come in and they've got to panic and get out of their position and push it in your favor 06:50.040 --> 06:55.630 until as you can see shooting stars you want at extreme highs or lows. 06:55.640 --> 06:59.120 They do happen in the middle but they don't matter as much. 06:59.230 --> 07:03.350 Obviously the more extended the market gets the better a shooting star is. 07:03.350 --> 07:06.830 So let's go ahead and take a look at the daily chart. 07:06.830 --> 07:07.310 There you go. 07:07.340 --> 07:09.770 So here's a nice move higher. 07:09.770 --> 07:14.240 Shooting Star preceded by hammer we broke through hammer that's a failed stick. 07:14.240 --> 07:19.740 That's a proven stick and we work down somewhat significantly there for a few weeks. 07:20.750 --> 07:28.610 And you can see that as time goes by the shooting star did fire off a signal shooting star here after 07:28.610 --> 07:31.970 a nice bounce from a hammer right ad previous support. 07:32.090 --> 07:38.590 Excellent cell signal shooting star here at a Gap which should offer resistance excellent cell signal. 07:38.600 --> 07:43.310 This shooting star at this previous support and resistance line again at two forty five or so. 07:43.310 --> 07:46.700 You can see it repeats itself on and on and on. 07:46.700 --> 07:48.600 Pay attention to these candlesticks. 07:48.800 --> 07:58.200 They matter they matter a lot so with your top down analysis you recognize that there is an inverted 07:58.200 --> 08:01.290 hammer there that has been broken two days in a row. 08:01.620 --> 08:03.390 But before that we formed a hammer. 08:03.390 --> 08:08.820 Let's go back to the hourly chart you can see that this inverted hammer has been broken to the upside. 08:08.820 --> 08:12.410 So let's go back to the hourly chart now that we have this inverted hammer here. 08:12.410 --> 08:18.130 It looks like the buyers are really starting to demand a lot here around 244. 08:18.150 --> 08:22.050 So this move is starting to make sense. 08:22.080 --> 08:26.330 It probably has legs up to to twenty nine or two 30 or so. 08:26.340 --> 08:30.180 It's not a guaranteed move but it certainly shows that there's resiliency there. 08:30.180 --> 08:35.970 That's the type of top down trading you need to do to be a resilient and successful day trader.