TA School

Shooting Star Pattern

Spot the single-candle bearish reversal pattern that signals exhaustion at the top of an uptrend.

beginner level7 min read

Interactive Model

Interactive Visual Walkthrough

Shooting Star Reversal

Step 1 of 3
Prevailing Uptrend

The asset is in a clear uptrend, with price printing consecutive higher highs and higher lows. Buyers remain in control.

Why it matters: A bearish reversal pattern requires an existing upward trend to reverse.

What is a Shooting Star Pattern?

The Shooting Star is one of the most popular single-candle bearish reversal patterns in technical analysis. It is characterized by a small real body at the lower end of the trading range, a long upper shadow (wick), and little to no lower shadow.

When it forms at the peak of an extended uptrendUptrendA market direction characterized by a sequence of higher highs and higher lows.Read full glossary entry →, it signals that the market is searching for a top and that a trendTrendThe general direction in which a security or market is moving over time.Read full glossary entry → reversal to the downside may be starting.

Pattern Structure

A candlestickCandlestickA method of displaying financial price data that shows the open, high, low, and closing prices of a security for a specific time period.Read full glossary entry → must meet specific structural guidelines to be classified as a Shooting Star:

  1. Location: Must appear after an established series of higher highs and higher lows (uptrendUptrendA market direction characterized by a sequence of higher highs and higher lows.Read full glossary entry →).
  2. Real Body: A small body located at the bottom of the session's range. The body can be bullish (green) or bearish (red).
  3. Upper Shadow: The upper wick must be at least two times the height of the real body.
  4. Lower Shadow: There should be little to no lower shadow (ideally less than 10% of the candle's total range).

Psychology Behind the Pattern

The psychology of a Shooting Star represents a classic buyer trap:

  • Initial Euphoria: The session opens, and buyers immediately push the price up, continuing the prevailing bullish momentum and making a new local high.
  • Institutional ResistanceResistanceA price level where selling pressure is strong enough to prevent the price from rising further. It represents a "ceiling" on the chart.Read full glossary entry →: At the expensive price levels, sellers step in aggressively (distribution), perceiving the asset as overvalued.
  • The Trap Closes: Long buyers are forced to liquidate, and short sellers enter the market. Sellers drive the price all the way back down to close near the day's open.
  • Result: The long upper shadow shows that any buying attempts were rejected, leaving buyers trapped at high prices and sellers in control heading into the next session.

Identification Rules

  • Look for the candle at key resistanceResistanceA price level where selling pressure is strong enough to prevent the price from rising further. It represents a "ceiling" on the chart.Read full glossary entry → zones, trendlines, or moving averages.
  • Ensure the upper wick is clearly twice the body height.
  • Look for an increase in volumeVolumeThe total number of shares, contracts, or units of a security traded during a specified time period.Read full glossary entry → on the Shooting Star day, which confirms institutional participation.
  • Check that there is very little to no lower wick.

Trading Setup

  • Entry: Sell short on the open of the candle after the Shooting Star, provided it confirms the pattern by falling below the Shooting Star's low. Alternatively, wait for that confirmation candle to close.
  • Stop-Loss: Place the stop-loss orderStop-Loss OrderAn order placed with a broker to sell an asset when it reaches a specific price, designed to limit a trader's loss on a position.Read full glossary entry → just above the highest point of the Shooting Star's upper shadow. A break above this level invalidates the bearish reversal structure.
  • Take Profit: Target the next logical supportSupportA price level where buying pressure is strong enough to prevent the price from falling further. It represents a "floor" on the chart.Read full glossary entry → zone, aiming for a risk-to-reward ratioRisk-to-Reward RatioA measure used to compare the potential profit of a trade against its potential loss. A ratio of 1:2 means the trader is risking $1 to potentially mak...Read full glossary entry → of at least 1:2.

Common Mistakes

[!WARNING]

  • Trading in Consolidations: Do not trade a Shooting Star that appears in a flat, sideways range. The pattern requires a prior uptrend to carry reversal weight.
  • Skipping Confirmation: Entering a short trade without waiting for the next candle's bearish follow-through can result in shorting right before the uptrend resumes.
  • Ignoring Wick Ratios: Trading a candle with a short upper wick that doesn't meet the 2x body height requirement. This represents weak rejection.

Key Takeaways

  • •Shooting Star is a single-candle bearish reversal pattern occurring at the top of an uptrend.
  • •The upper shadow must be at least two times the height of the real body.
  • •Little or no lower shadow should be present.
  • •The color of the body is not critical, but a bearish (red) body indicates stronger reversal momentum.
  • •Confirmation is required by a bearish follow-through candle closing below the shooting star body.
Knowledge CheckQuestion 1 of 5

What is the minimum required ratio of the upper shadow to the real body for a valid Shooting Star?

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