Shooting Star

A shooting star is a bearish reversal candle that forms after a price advance. It has a small body near the bottom of its range, a long upper wick at least twice the body's length and little or no lower wick. The shape tells a clear story: buyers pushed price sharply higher during the period, but sellers took control and drove it back down to close near the open.

Anatomy#

Why it matters#

The long upper wick shows that higher prices were tried and rejected. Buyers who bought near the high are immediately losing money, and the failure to hold gains suggests demand is running out. When this happens at a resistance level or after an extended run, the odds of a pullback or reversal increase. See Acceptance and Rejection.

The example's ending is the point: a valid pattern is not always a worthwhile trade.

Shooting star vs inverted hammer#

They have the same shape. A shooting star appears after an advance and is bearish. An inverted hammer appears after a decline and can be bullish if confirmed. Location is everything. See Hammer and Hanging Man.

Trading the shooting star#

1. Location: resistance, a previous high or after an extended rally.
2. Confirmation: the next candle closes below the shooting star's body or low.
3. Entry: on the confirmation close, or on a pullback towards the shooting star's body.
4. Stop: above the high of the upper wick.
5. Target: the next support level, with reward checked against the wick based risk.

Stronger signals have a very long upper wick relative to the body, appear on higher timeframes, coincide with high volume and line up with other bearish signs such as divergence on momentum indicators. See RSI (Relative Strength Index).

Managing the trade after entry#

Once a confirmed shooting star trade is open, many traders move the stop down to just above the confirmation candle's high after price makes a new low, reducing risk quickly. If price rallies back above the shooting star's body instead, the pattern has likely failed and buyers have regained control; exiting early there often saves most of the planned loss. Recording these outcomes in a Trading Journal shows whether the pattern works in the markets you trade.

Common mistakes#

• Shorting every long upper wick in a strong uptrend, where pullbacks are often brief.
• Skipping confirmation.
• Ignoring risk to reward: stops above a long wick can be far from the entry.

Frequently asked questions#

What does a shooting star candle mean?#

That buyers pushed price higher but sellers rejected those prices, closing near the low. After a rise, it can signal a bearish reversal.

Is a shooting star a reliable signal?#

It is more reliable at resistance, on higher timeframes and with confirmation from the next candle. Alone, it is a weak signal.

What is the difference between a shooting star and a gravestone doji?#

They are similar. A gravestone doji has essentially no body, with open and close at the low; a shooting star has a small body.

Next, learn one of the strongest two candle patterns: Engulfing Patterns.