The SPX shows a “Shooting Star” candle pattern. The shooting star candle is much like the “Inverted Hammer” but it comes after a move up in price.
This is a bearish candle for many reasons.
- After shooting higher, the bears were able to drive price all the way back below the open, near the low.
- Long wicks above the real body in candle charting therefore represent selling pressure.
- The close was near the open, creating a small real body.
- Small real bodies in candle charting represent indecision, uncertainty. This uncertain pause coming after a move up is not good for the bulls.
Adding weight to this perspective is that this candle pattern is formed at resistance of prior highs. When there are a confluence of events lining up then it allows an investor to have more confidence in the idea.
Also, interesting to note that the other major U.S. Indices are showing bearish candles. The Dow Jones Industrial is showing a similar candle to this, albeit just above prior highs, and the Nasdaq Composite is showing a “Bearish Engulfing” pattern.
- After shooting higher, the bears were able to drive price all the way back below the open, near the low.
- Long wicks above the real body in candle charting therefore represent selling pressure.
- The close was near the open, creating a small real body.
- Small real bodies in candle charting represent indecision, uncertainty. This uncertain pause coming after a move up is not good for the bulls.
Adding weight to this perspective is that this candle pattern is formed at resistance of prior highs. When there are a confluence of events lining up then it allows an investor to have more confidence in the idea.
Also, interesting to note that the other major U.S. Indices are showing bearish candles. The Dow Jones Industrial is showing a similar candle to this, albeit just above prior highs, and the Nasdaq Composite is showing a “Bearish Engulfing” pattern.