New here looking for C&C

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I don't accept "too many colors" as a legitimate criticism because it's not my style. I think I get what you're talking about, but to me sprites that use the style you're talking about are ugly. I hate cell-shading, I tend to use a more realistic shading style.

The number of colors you use isn't really related to the style of shading. Your sprite is about the size of a fighting game sprite, so I'll use those to illustrate my example. Your sprite has over 32 colors. Most fighting game sprites use at most 16, and don't suffer from it. For example, look at this Ken sprite, from Capcom vs. SNK (left) and SNK vs. Capcom (right):

Both of these use under 16 colors, but the style is completely different. Capcom (left) tends to go for a cel shaded style, while SNK (right) goes for something closer to realism. If you study them closer, you'll see that one difference is that Capcom blocks out regions with their shade, and antialiases the difference, while SNK tends to make a gradient out of their shades.

The point is, you're simply using too many colors and using them inefficiently. Another thing I noticed is that you seem to get a lot of your shades by just moving the lighting up and down. You should consider getting a richer ramp, like this tutorial (which should be on this site, hint hint) illustrates: