Shooting Star Candlestick
A Shooting Star candlestick is a bearish reversal pattern that typically appears at the top of an uptrend. It’s a single-candle pattern that signals a potential shift in market sentiment from bullish to bearish.
Key Characteristics of a Shooting Star:
- Small real body near the bottom of the candle.
- Long upper shadow, typically at least twice the length of the real body.
- Little or no lower shadow.
- Appears after a price rally or uptrend.
- The color of the body (red or green) is less important than the candle’s structure.
What It Means:
- The long upper wick shows that buyers pushed prices higher, but sellers took control and forced the price back down near the open.
- This loss of upward momentum suggests that bulls are losing strength, and a reversal or pullback might be imminent.
Trading Signal:
- A Shooting Star alone isn’t enough for a trade decision.
- Confirmation is needed — usually a bearish candle on the next trading period, indicating follow-through selling.
- Traders often place stop-losses above the high of the Shooting Star for protection.
Example:
Suppose a stock has been rising steadily and then forms a Shooting Star candlestick. The next day, if the price opens lower and closes bearish, this confirms the reversal pattern. Many traders might then consider short positions or lock in profits.
Let me know if you’d like a visual illustration or a comparison with similar candlestick patterns like the Inverted Hammer or Doji.