What it looks like
It comes after a rise of several candles. The upper wick is long, typically at least twice the length of the body. The body is small and sits near the bottom of the candle's range. There is little or no lower wick. Body colour is secondary.
What it means
Buyers had been in control and pushed price higher during the candle, but sellers drove it back down to close near the low. The higher prices were rejected. It is a sign the rise is tiring, not proof that it has turned, so it needs a confirming close below its low.
How to trade it
- 1
Confirm: wait for the next candle to close below the shooting star's low.
- 2
Enter: sell on that confirming close, or on the open of the following candle.
- 3
Stop: place it just above the shooting star's high, the tip of its upper wick.
- 4
Target: aim for 2 times the stop distance, or the nearest swing low if it is closer.
- 5
Example: on the US30 1 hour chart a shooting star has a 60 point range. The next candle closes below its low, you sell with a stop 5 points above the high, a 65 point risk, and aim 130 points lower.
A candle closing above the shooting star's high. Buyers have then taken back the level they were rejected from.
Where it works best
At a ceiling: a previous swing high, a pivot, the previous day's high or a round number, after a clear rise. It is weak in the middle of a range.
WickSpeak finds the shooting star automatically on any chart and names it on the candles that made it. Next to the name it writes what the pattern is, how to trade it and what proves it wrong, so you never have to guess the rule. In Playbook you can use the shooting star, or any of the 146 patterns, as a condition alongside up to 12 conditions on any of 12 timeframes, then backtest it on past candles with your costs.
Common mistakes
- Selling before the next candle closes below the low.
- Calling any long upper wick a shooting star when there was no rise before it.
- Setting the stop inside the upper wick rather than just above the high.
Related patterns
Questions traders ask
Is a shooting star bearish?
Yes, it is a bearish warning after a rise. On its own it only shows buyers were rejected. It becomes a sell signal once the next candle closes below its low.
What is the difference between a shooting star and an inverted hammer?
They have the same shape: a long upper wick and a small body at the bottom. A shooting star forms after a rise and is bearish. An inverted hammer forms after a fall and is a gentle bullish hint.
How long should the upper wick be?
A common rule is at least twice the body. The longer the wick compared with the body, the clearer the rejection.
What cancels a shooting star?
A close above its high. At that point buyers have pushed past the rejection, so the bearish reading no longer holds.