Short answer
What is a shooting star candlestick?
A shooting star is a single candle with a small body near the bottom of its range and an upper wick at least twice as long as the body, formed after a rise. It shows buyers pushed price higher but sellers drove it back down before the close. It is a bearish reversal sign once the next candle closes lower, and matters most at a supply zone.
Key takeaways
- A shooting star has a small body near its low, an upper wick at least twice the body and little or no lower wick.
- It must form after a rise; the same shape after a fall is an inverted hammer.
- A red shooting star, closing below its open, is slightly stronger than a green one.
- Confirmation: the next candle closes below the shooting star's low, or at least well below its body.
- At a fresh supply zone, the shooting star is part of the zone's base, and its high often marks the distal line.
- Many cash-market swing traders use it to book profits or tighten the stop on a long position; short trades in the cash market must be closed the same day.
What is a shooting star candlestick?
During a shooting star's period, buyers extend the rally to a new high, then sellers take over and push price back near the open. The long upper wick is the record of that rejected buying. After a rise, it suggests the buyers who drove the rally are running out of force at that price.
- Small body in the lower third of the range.
- Upper wick at least twice the length of the body.
- Little or no lower wick.
- After a rise: the pattern needs an advance before it.
What is the difference between a shooting star and an inverted hammer?
They are the same shape in different places. After a rise, the long upper wick is a shooting star, a bearish sign. After a fall, it is an inverted hammer, a weak bullish sign. A gravestone doji is the extreme version, with almost no body at all.
Hammer — after a fall
Hanging man — after a rise
Inverted hammer — after a fall
Shooting star — after a rise
The same two shapes get different names by location: a long lower wick is a hammer after a fall and a hanging man after a rise; a long upper wick is an inverted hammer after a fall and a shooting star after a rise.
Why does a shooting star matter at a supply zone?
A shooting star's wicks make up most of its range, so by the 50% rule it is a base candle. When it forms after a rally and a strong red candle then leaves it, the shooting star is the base of a Rally-Base-Drop supply zone, and its high usually marks the zone's distal line. When it forms at an existing fresh supply zone, it shows the pending sell orders there absorbing the buying.
How do you trade a shooting star?
Most cash-market swing traders use a shooting star at a supply zone to manage a long position: book part of the profit, exit, or move the stop up. Shorting in the cash market is intraday only, so traders who want to hold a short position overnight use futures or options.
- Check the rise and the location at a fresh supply zone.
- Let the shooting star close, then wait for the next candle.
- Confirmation: a candle closes below the shooting star's low.
- For a long position: exit or tighten the stop. For a short trade: enter below that confirmation close.
- Place a short trade's stop above the shooting star's high or the zone's distal line, whichever is higher, with a target of at least twice the risk.
What are common mistakes with the shooting star?
- Calling it a shooting star after a fall: that shape is an inverted hammer.
- Selling before the candle closes: a mid-session shooting star can close as a strong green candle.
- Skipping confirmation: strong uptrends often absorb one rejection candle and keep rising.
- Stop inside the upper wick: the wick is where price has already been; the stop belongs above it.
Frequently asked questions
Is a shooting star bullish or bearish?
Bearish. After a rise, a shooting star shows buyers were rejected near the high. It becomes a usable signal when the next candle closes below its low, ideally at a fresh supply zone. The same shape after a fall is an inverted hammer, which leans bullish.
Does the colour of a shooting star matter?
Slightly. A red shooting star closed below its open, so sellers finished a little stronger than in a green one. The location at a supply zone and the confirmation candle matter much more than the colour.
Can I short a stock on a shooting star in the cash market?
Only intraday. In the Indian cash market, short positions must be squared off the same day, so traders who want to hold a short for days use stock futures or options. Most swing traders in the cash market use a shooting star at a supply zone to exit or protect an existing long position instead.
Where is the stop loss for a shooting star trade?
For a short trade, just above the shooting star's high, or above the supply zone's distal line if that is higher. The high marks where sellers took over; a close above it means the buyers have pushed through.
Put this into practice
Work out the numbers before the market moves, then let an alert bring you back to your own plan.
Educational content only. Nothing here is investment advice or a recommendation to buy or sell any security. Chart diagrams use illustrative prices, not market data. Trading involves risk of loss; verify prices independently and apply your own risk process.