In a bullish up trend any shooting star with below average volume is simply signalling a possible pause in the upwards trend, with a potential short term pull back. Following such a signal, we would then be considering the previous and subsequent price action for confirmation of a continuation of the trend. As the trend develops further, this initial weakness may be confirmed further with additional shooting star candles, with average volumes. Once we have two candles of similar proportions in a trend, and in the same time frame, we can then compare volume between the two candles. If the first candle was an initial sign of weakness, then the second, with increased volume is confirming this weakness further. After all, if the volume on the second shooting star is higher than the first, so 'weakness' has increased as more selling is coming to the market and forcing prices lower in the session.

This brings me to an important point which I would like to introduce here. It is perhaps an obvious point, but nevertheless one which is worth making. If we see one shooting star, this can be taken as a sign of weakness. If we see two consecutive shooting stars, or two relatively close to each other, this is increasing the bearish sentiment. If a third appears then this is adding yet more bearish sentiment. In other words, single candles are important, multiple appearances of the same candle, in the same price area, exponentially increase the level of bearish or bullish sentiment. And remember, this is JUST based on price action alone. Add in the volume aspect and this takes our analysis to another level, which is why I find it so strange that PAT traders don't use volume!

Fig 6.10 Shooting Star Candles And Volume If we took this price pattern, as shown in Fig 6.10, and imagine that these were in fact three simultaneous candles, each with increasing volume, then based on this combination of candle pattern and volume, do we think the market is likely to rise or fall? Clearly, the market is going to fall and the reason is very straightforward. First, we have seen three consecutive candles, whose high has failed at exactly the same price level, so there is weakness in this region. Second we have three shooting stars, which we already know are signs of weakness, and finally we have volume. We have rising volume on three identical candles at the same price point on our chart. The market is really struggling at this level, and the last two could certainly be considered part of the selling climax.

Moreover, if these signals were to appear after a period of sideways price action, then this gives the signals even more strength, as we are then validating our VPA analysis with another technique of price analysis, which is support and resistance. It is very easy with hindsight to look back and identify tops and bottoms. What is far more difficult is to try and identify major turning points in real time so I have created the schematic in Fig 6.11 to explain how this action plays out on a chart. It will also allow me to introduce other broader aspects of this methodology.