Shooting Star
The shooting star is a bearish reversal pattern appearing at the top of uptrends. It has a small body at the bottom with a long upper wick, showing that buyers pushed prices higher but sellers regained control.
Formation
- 1.Small real body at the lower end of the trading range
- 2.Long upper shadow (at least 2x the body length)
- 3.Little or no lower shadow
- 4.Forms after an uptrend
Psychology
During the session, buyers pushed prices significantly higher. However, sellers stepped in and drove prices back down near the open. This rejection of higher prices signals potential exhaustion of buying pressure.
Trading Tips
- ✓Most effective after a sustained uptrend
- ✓Wait for bearish confirmation on next candle
- ✓Set stop-loss above the shooting star's high
- ✓Longer upper wick indicates stronger selling pressure
Confirmation Signals
- →Next candle closes below the shooting star's body
- →Increased volume on the shooting star
- →Located at resistance level
- →RSI showing overbought conditions
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Common questions about this pattern
A shooting star signals potential bearish reversal at the top of uptrends. The long upper wick shows buyers tried to push higher but sellers rejected those prices, suggesting the uptrend may be ending.
Wait for confirmation (next candle closing lower). Enter short with a stop above the shooting star's high. Target previous support levels. The pattern is more reliable at resistance levels.
A confirmed shooting star is followed by a bearish candle that closes below the shooting star's body. Without confirmation, the pattern could be a false signal and the uptrend might continue.