Hammer – These two names are the same but on the opposite ends of the trend. The hammer is found at the bottom of a downtrend while the hanging man is found at the top of an uptrend. The shadow is usually twice as long as the body and the body is usually on top of the shadow (below the shadow for the hanging man). The closing price can be above or below the opening price.

Figure 3 A hammer appeared with the gap on high volume. The low was made that day.

Shooting Star – In a bullish uptrend, this bar is seen as a possible reversal, normally accompanied by high volume. The body is usually half the size of the shadow. The shadow means that the buying and selling were equal measure, indicating that the bulls are in no better strength than the bears. The selling are drawing more participants in, closing below the opening.

Figure 4 Example of a shooting star, part of VSA where the new high is made on low volume.

Although candlesticks are extremely helpful, VSA adds an extra dimension to it, involving volume to confirm what has already been taught. VSA and candlesticks confirm each other’s meanings can bring very powerful signals to watch for reversals and take appropriate actions. Unusually high volume usually appears during trend changes, it is no surprise that these are periods where the media usually mentions volume.