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Shooting Star

A shooting star is a bearish candlestick with a long upper shadow, little or no lower shadow, and a small real body near the low of the day. It appears after an uptrend. Said differently, a shooting star is a type of candlestick that forms when the price opens, advances significantly, but then closes the day near the open again.

For a candlestick to be considered a shooting star, the formation must appear during a price advance. Also, the distance between the highest price of the day and the upper shadow must be more than twice as large as the shooting star's body. There should be little to no shadow below the real body.

If the market is in a bullish uptrend and you identify a shooting star candle, then there is a solid chance that the trend will reverse. For this reason, traders use this candle to enter short trades on the assumption that the bullish move is running out of steam.

Trading this reversal pattern is fairly simple. First, the implication is for lower prices therefore we want to look for entries to short on the open of the next candle . Since the prices were previously rejected at the high of the shooting star, we will look