Page 6 of the handbook, single candle
Shooting Star
- Signal
- Bearish reversal
- Candles
- 1
- Best found
- At the top of an uptrend, ideally at resistance
What has to be true
- Long upper wick
- Small body at or very near the low
- Found at the top of an uptrend
A bearish candlestick pattern found at the top of an uptrend.
The shooting star (aka shooter) candle has a long upper wick and a small candle body, with the body at or very near the low of the candle.
The long upper wick (especially when found at resistance, at the top of an uptrend) signifies buyers have been exhausted, and sellers have shown presence to stop prices from moving higher.
Here price was trending up before establishing a clear resistance, then one failed breakout produced the shooting star. As you research this candle on your own, you will notice that the strongest shooters will often wick above a resistance exactly like this example.
Side note: the same can be said about the hammer. The strongest hammers often wick below a support.
Shooters in a primary downtrend
For additional confidence, look for shooting stars to appear at the top of an uptrend that is secondary to a larger primary downtrend, like this example taken from the SPY weekly during the 2022 decline.
Both highlighted shooters are rejecting a resistance to create lower highs. You are stacking confirmations:
- Bearish primary trend
- Bearish candlestick pattern at a high probability area of retracement