The first rule for this formation is that on the day of the formation, the candle opens higher than the previous day's close. From there, the bulls must push prices substantially higher intraday. Then, at some point during the trading day, the bears must come out, and push prices much lower, closer to the opening of the day. Ideally, there is no lower shadow, but a very long upper shadow, and a small real body. The colour of the real body does not matter.
This marks a change of control from bulls to bears, and is a fairly reliable signal. For greater accuracy, I would suggest waiting for downside confirmation on the following day.
Notice how in the above chart, which is of the ten year yield, the price was overbought, and it was at a former high level, which indicates possible resistance, and a double top. This combined with the shooting star that formed provided three separate pieces of evidence that a reversal was likely. Bond yields play an indirect role in the price of gold.
