The Shooting Star is a bearish reversal candlestick pattern that signals a potential top in an uptrend. When you spot this pattern after a rally, it warns that buyers are losing control and sellers may be ready to take over. Mastering the Shooting Star can help you exit long positions at optimal times or enter profitable short trades.
What is a Shooting Star Candlestick?
A Shooting Star is a single candlestick pattern that forms at the top of an uptrend. It has a small body at the bottom of the candle with a long upper shadow (at least twice the length of the body) and little to no lower shadow. The pattern resembles a shooting star falling from the sky, hence its name.
Visual Description: Picture a small square or rectangle (the body) at the bottom, with a long vertical line extending upward (the upper shadow). The body can be either red (bearish) or green (bullish), though red Shooting Stars are considered slightly more bearish.
Shooting Star Formation Criteria
For a candlestick to qualify as a valid Shooting Star, it must meet these specific criteria:
- Location: Must appear after an uptrend or significant rally
- Upper shadow: At least 2x the length of the body (ideally 2.5x or more)
- Lower shadow: Very small or nonexistent
- Body position: Located in the lower portion of the trading range
- Body size: Relatively small compared to the upper shadow
Psychology Behind the Shooting Star
Understanding the market psychology helps you trade the pattern more effectively:
- Opening: The session opens and buyers continue pushing prices higher
- Rally: Bulls push price significantly higher during the session, creating new highs
- Rejection: Sellers step in aggressively, pushing price back down
- Close: Price closes near the open, giving back most or all of the session's gains
The long upper shadow represents the failed attempt by buyers to push prices higher. This rejection of higher prices is what makes the Shooting Star bearish.
How to Trade the Shooting Star
Entry Strategies
Wait for confirmation before entering a trade. The pattern alone is not enough.
Trading Example: Short Entry
Stock XYZ has rallied from $40 to $55 over three weeks. A Shooting Star forms at $55 with a high of $58.
The next day opens at $54 and closes at $52 (below the Shooting Star's low).
Entry: Short at $51.50 (below confirmation candle's close)
Stop loss: $58.50 (above the Shooting Star's high)
Target: $48 (previous resistance turned support)
Confirmation Signals
Look for these signs to confirm the Shooting Star:
- A bearish candle the following day that closes below the Shooting Star's low
- Gap down opening the next session
- Increased volume on the Shooting Star or confirmation candle
- Break of short-term support levels
Stop Loss Placement
Place your stop loss above the high of the Shooting Star. If price breaks above this level, the pattern has failed and the uptrend may continue.
- Conservative: 1-2% above the Shooting Star's high
- Aggressive: Just above the Shooting Star's high
Profit Targets
Set profit targets using these methods:
- Previous support levels from the rally
- Fibonacci retracement levels (38.2%, 50%, 61.8% of prior move)
- Risk/reward ratio of at least 2:1
- Moving averages as dynamic support targets
Factors That Increase Reliability
Resistance Levels
A Shooting Star at a key resistance level is more significant:
- Previous swing highs
- Round psychological numbers ($100, $50)
- Moving average resistance (200 MA, 50 MA)
- Trendline resistance
Overbought Conditions
- RSI above 70 when Shooting Star forms
- Price extended far above moving averages
- Stochastic in overbought territory
Volume Analysis
- High volume on the Shooting Star increases significance
- Volume spike shows strong selling pressure
- Declining volume on the rally leading up to the pattern
High-Probability Shooting Star Setup
Stock ABC rallies from $200 to $250 (25% gain). At $250:
Price hits all-time high resistance
RSI reaches 78 (overbought)
A Shooting Star forms with upper shadow 3x the body
Volume is 80% above average
This confluence creates a high-probability bearish reversal setup.
Shooting Star vs. Similar Patterns
Shooting Star vs. Inverted Hammer
These patterns look identical but have opposite meanings based on location:
- After uptrend = Shooting Star (bearish)
- After downtrend = Inverted Hammer (bullish)
Shooting Star vs. Gravestone Doji
The Gravestone Doji is similar but has virtually no body (open equals close). Both are bearish at the top of uptrends, but the Gravestone Doji represents even more indecision.
Shooting Star vs. Hanging Man
Both appear at uptrend tops, but:
- Shooting Star: Long upper shadow, small lower shadow
- Hanging Man: Long lower shadow, small upper shadow
Common Trading Mistakes
- No confirmation: Shorting immediately on the Shooting Star without waiting for confirmation
- Wrong location: Trading Shooting Stars in sideways or downtrending markets
- Tight stops: Placing stops just above the body instead of above the upper shadow
- Lower timeframes: Shooting Stars on 5-minute charts are far less reliable than daily
- Fighting strong trends: Shorting Shooting Stars in powerful bull markets without other bearish evidence
Shooting Star Pattern Statistics
Based on historical data, approximate success rates:
- Shooting Star with confirmation: 60-65% bearish reversal rate
- Shooting Star at resistance with volume: 65-70% success rate
- Shooting Star without confirmation: 40-45% success rate
Success rates improve when multiple factors align (resistance, overbought conditions, volume).
Using Shooting Stars for Long Exits
Even if you do not short, Shooting Stars are valuable for managing long positions:
- Tighten stop losses when a Shooting Star forms
- Take partial profits on existing long positions
- Avoid adding to long positions until pattern resolves
- Watch for confirmation to decide whether to exit completely
Track Your Shooting Star Trades
Pro Trader Dashboard helps you analyze your candlestick pattern trading. See which setups perform best for your strategy.
Summary
The Shooting Star is a bearish reversal candlestick that appears at the top of uptrends. Its long upper shadow shows that buyers pushed prices higher but sellers rejected those levels, driving price back down to close near the open. Always wait for confirmation before trading, place stops above the pattern's high, and look for confluence with resistance levels and overbought indicators. The Shooting Star is most effective on daily and higher timeframes at significant resistance zones.
Learn more: Evening Star pattern and Engulfing patterns.