Shooting Star Strategy Gbpusd Eurusd

• Shooting star — here is another simple forex strategy for trading the GBP/USD and EUR/USD pairs.
• So if you are a trader looking for an easy strategy to trade the euro or the British pound, you can try this one.
• This simple strategy trades price action using the shooting star candle.
• Timeframe used: 5 minutes only.
• Forex indicators: the Relative Strength Index (RSI) set to a 14-period setting.
• Currency pairs: the British pound against the US dollar, and the euro against the US dollar.
• Trading sessions: use the London session and the US session.
• This price-action strategy also requires you to know what a shooting star candle is.

What Is a Shooting Star Candle?

This is what a shooting star candle looks like:

So when a shooting star forms on the chart, what is it telling you?

When it forms in a rising market, it points to a bearish move. The color of the candle does not matter — red or green. So this strategy is for sell entries only.

Sell Entry Conditions

• The market must be bullish (in an uptrend).
• Check whether the RSI line is above or near 70, which the source describes as an oversold condition.
• Then check whether a shooting star candle has formed; if you see one, move to the next step.
• Place a pending sell order at the low of the candle.
• Next, place your stop-loss 3–5 pips above the high of the candle.
• You should also set a take-profit target. You can do this by using the 50% level of the up-move, or you can use the nearest prior support level as your take-profit target.

Advantages of the Strategy

During the European and US forex sessions, the market has very high liquidity, and this strategy is meant to be traded during those hours.

The Japanese shooting star is a bearish candle; its formation points only to a downward direction. What you tend to see is that after a shooting star forms, price tends to fall, so this strategy lets you enter at the start of that price decline.

Disadvantages of the Strategy

Do not try to use this scalping strategy on the foreign-exchange market during the Asian trading session. There is not much volatility in that session, and there is a chance that this system may not perform well.

So the shooting star is a bearish candle with a long upper shadow and little or no lower shadow, and a small real body near the low of the day, appearing after an uptrend. Put differently, the shooting star strategy for GBP/USD and EUR/USD forms a type of candlestick where the candle opens, advances significantly, but then closes back near the open again.

For a candle to count under the shooting star strategy for GBP/USD and EUR/USD, the pattern must also appear while price is advancing, the distance between the candle’s high and the open must be at least twice the size of the shooting star’s body, and there should be little or no shadow below the pattern’s real body.

Read more:

• Trading-the-news strategy concepts in the forex market
• The best way to build your own trading strategy
• A full explanation of the false-breakout strategy

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