A bearish candlestick with a small body at the bottom and a long upper wick — a rejection of higher prices at the top of an uptrend.
A shooting star is a single candle with a small body near the LOW of the candle and a long upper wick at least twice the body length. It tells a story: during the period, buyers pushed price aggressively higher, but sellers stepped in and drove price all the way back down to where it opened. The long upper wick is the rejection.
Shooting stars are bearish reversal signals — but ONLY at the top of an uptrend or at major resistance. A shooting star in the middle of consolidation means nothing. The context matters more than the candle itself. The signal is strongest when the candle forms at a key resistance level after an extended rally.
The entry is below the LOW of the shooting star, ideally on the next candle's break. The stop is just above the upper wick. The target is the next major support level or a measured move based on the prior swing.
USD/JPY printed a daily shooting star at 161.95 in July 2024 right at the BoJ intervention zone. The next session closed below the body and price collapsed 800 pips over the following three weeks.
Frequently asked about shooting star
What is a shooting star in trading?+
A bearish candlestick with a small body at the bottom and a long upper wick — a rejection of higher prices at the top of an uptrend.
When will I see shooting star used in real trading?+
At the top of trends, at major resistance, after fast news-driven rallies, or at key Fibonacci extension levels.
What is the most common mistake traders make with shooting star?+
Shorting any shooting star regardless of context. A shooting star in the middle of a downtrend is a continuation signal, not a reversal. Always check the bigger trend.
What do experienced traders know about shooting star that beginners don't?+
The cleanest shooting stars form at confluence levels: resistance + Fib + round number. Single-context shooting stars are noisy. Stack the context for high probability setups.
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