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Shooting Star

Shooting star in gold

Gold, as an asset traded in financial markets, may display shooting star patterns. Let’s take a look at gold’s weekly chart from 2016-2018.

Gold shooting star

In April 2018, we see a shooting star candlestick (market with the blue ellipse). This weekly candlestick displays the classic hallmarks of a shooting star pattern: the relatively strong initial rise and the reversal erasing most of the move up. The difference between the close and the low for that week (called the “shadow”) is slightly more pronounced than is typically the case for classic shooting stars but this candlestick was a bearish sign nonetheless. And, as it turns out, what followed was the steepest decline in gold since late 2016. In this case, the shooting star pattern was actually the local top and a very meaningful reversal.

Shooting star in silver

Silver is also an asset which shows shooting star patterns. If we take a look at the weekly chart for 2018-2018, we will notice a shooting star candlestick in June 2018 (marked with a blue ellipse on the chart below).

Silver shooting star

At the beginning of the week, silver went up quite strongly but then reversed course, went down, erased all of the move up and even closed the week lower than it had started it. This was a relatively strong bearish indication. What followed the discussed week was an uncanny period of declines, from June to September 2018, within which the white metal went down on every single week, except one. Again, the shooting star turned out to be a quite important sign.

Shooting star in mining stocks

Shooting stars are also present in the analysis of mining stocks. Let’s take a look at the monthly chart for an individual mining stock, Anglogold Ashanti Ltd. (AU).

Mining stocks shooting star

In late 2010, we saw a classic shooting star candlestick. This is a particularly interesting one as the stock subsequently went higher. It did appreciate but the high of the shooting star was not broken to the upside and the shooting star can actually be considered the end of the bull market for this particular stock and a sign of the upcoming end of the bull market in precious metals as a whole.

Shooting stars can be considered bearish signs. At the same time, there is nothing automatic about them. This means that they can provide signs but you should consider them in conjunction with other signs from the precious metals market. In this way, shooting stars can be used to confirm other bearish signs. And vice versa, once we see a shooting star, other bearish indications can reinforce its implications.

We hope you have enjoyed reading the above definition. If you’d like to learn more about shooting stars in gold, silver, mining stocks and about gold’s most recent price swings and their implications, we invite you to sign up for our gold newsletter. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today.

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