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Shooting star is a bearish trend-reversal candlestick pattern indicating reversal of an existing uptrend. It is a comparatively rare and single candlestick pattern which is formed at the top of an uptrend. When the formation occurs at the bottom of a downtrend it is called inverted hammer pattern. Shooting star formation is very similar to gravestone doji formation; the difference is that the candlestick has a small real-body.


The requirements of a shooting star candlestick pattern include,

• The pattern should form at the top of a significant uptrend.
• The candlestick should have a long upper shadow and no/very small lower shadow.
• The small real-body of the candlestick should be at the lower end; at or near the low of the day.
• Often the candlestick is formed a gap above the real-body of the previous candlestick; exception - Forex charts.

Shooting star candlestick pattern occurs when the existing bullish trend weakens and the selling pressure increases. The fact that bears have managed to close the day at or near the low of the day even when the price forms a new high, indicates that the bears are getting hold of the market.

Shooting star candlestick formation is considered a bearish weak reversal pattern. It is a very good indicator of resistance levels on a chart. The reliability of the pattern increases with the strength of the existing uptrend, and with increase of upper shadow and shortening of real-body and lower shadow. With shooting star pattern confirmation of trend-reversal is needed, which can be a gap down opening, a bearish candlestick or lower close on the next trading day.

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