Shooting Star: Explained in Details
Oct 3, 2025
Definition
A shooting star is a candlestick that signals a potential bearish reversal. It has a small real body at the bottom of the candlestick. The upper shadow is at least twice the size of the body. There is little or no lower shadow.
In the markets, bulls and bears are always in conflict. Knowing when one might take control from the other is a useful skill.
A shooting star is a candlestick that indicates the bears might be taking control, at least in the short term. It has a small body at the bottom, a long upper shadow, and little or no lower shadow.
This structure shows that buyers first raised the price a lot. However, strong resistance from sellers or a lack of buying power pushed the price back down. It closed near the opening price, which shows a loss of bullish momentum.
Key Takeaways
The shooting star is a candlestick one-day pattern, indicating a potential bearish reversal.
It is characterized by a small body at the lower end and a long upper shadow.
The pattern is an indicator, not a guarantee, of a bearish trend reversal.
Confirmation and volume analysis are crucial to validating the pattern.
Common mistakes include trading solely on the candlestick signal without confirmation.
Understanding the Shooting Star Pattern
The shooting star is seen as an early warning that the prior bullish momentum is fading. The pattern shows bulls losing a short-term battle to the bears. There are a number of characteristics that confirm the existence of a shooting star candlestick:
It comes after a strong uptrend
It occurs at or near a recent high
The upper tail, or shadow, is at least twice as long as the body
The lower shadow is non-existent or very short, signaling a close near the low of the day
The candlestick body is very short but not nonexistent. It's small body shows little difference in the opening and closing prices
The shooting star signal is considered even stronger if:
There is no lower shadow at all
The closing price is below the opening price
Note that the existence of a shooting star candlestick doesn't guarantee a reversal. Traders should seek additional confirmation.
Confirming the Shooting Star Pattern
Traders can confirm the shooting star pattern in a number of ways. Signs of confirmation can include:
Other candlesticks, such as a strong bearish bar in the following period
The shooting star occurred at a previous resistance level, particularly a major Fibonacci level
A drop from a high level can happen. This can also occur with a crossover in the RSI. It may happen with the MACD or the stochastic oscillator as well.
Volume Analysis to gauge underlying buying and selling pressure
These signals can help a trader judge whether the shooting star is part of a genuine reversal pattern or just a one-off event.2
Perhaps the most reliable is a strong bearish follow-through candle, ideally closing below the shooting star's low. A weak confirmation candle, like a doji, can show hesitation. This reduces the strength of the signal.
High volume on the day the shooting star forms, along with a bearish candle the next day, shows strong selling pressure. This reinforces the chance of a trend reversal. Conversely, low volume weakens the signal, increasing the chances of a failed setup.2
Furthermore, traders also look for negative divergence, where prices are rising but volume is weak.
How to Trade a Shooting Star Pattern
A crude oil futures trader wants to take a short position after a rally. This rally is shown in the weekly chart below. Using the shooting star pattern, this is how the trader might play it:
Step 1: Recognizing the Shooting Star
After a 15% rise in three months, the trader wants to find a chance to enter a short position if the trend reverses. A shooting star appears with the high of the upper tail just above $80, near a previous resistance area.
Step 2: Validating the Bearish Setup
Once the shooting star is confirmed the bearish pattern needs to be validated. The fact that it formed near a level where the last reversal occurred is one signal. The stochastic oscillator's %K line has dropped from overbought levels. A bearish crossover seems likely, showing clear signs of a reversal.
The next week, the market closes below the low of the shooting star. A bearish candlestick appears, and the stochastic oscillator shows a bearish crossover. Together, these signals provide strong confirmation.
The trader may also use volume analysis to confirm the pattern.
Step 3: Initiating a Short Position
A more aggressive trader might take a short position if the market drops below the low of the shooting star. The shooting star appeared near a previous resistance level. The stochastic oscillator has also dropped after being overbought. They would want to set a relatively tight stop-loss order.
A less aggressive trader might enter after the market closes below the low of the shooting star. This would happen at the end of the week, with confirmation from a bearish candlestick and a stochastic crossover. This trader also enters a stop-loss order—in this case, above the high of that week's bearish candlestick.
Both traders would set a target price, keeping in mind that shooting stars can signal both short- and intermediate-term reversals.
Step 5: Early Exit Signals
The trader monitors the position for any signs that the reversal is ending. These could include candlestick patterns like a hammer, inverted hammer, bullish engulfing, or morning star. They may also include bullish divergence in the RSI or a bullish stochastic crossover.
With any of those signals, the trader can take some profits. They may wait for more confirmation before fully exiting, or they can exit the position right away.
Common Mistakes and Limitations
The shooting star pattern can be misinterpreted and misplayed. Some common pitfalls include:
Too Much Weight: The shooting star alone does not automatically signal a trend reversal.
Neglecting Confirmation: Trading a shooting star without additional confirmation is a common mistake.
Ignoring Market Context: In a strong uptrend, a candlestick from one day of trading might just be random.
Overly Optimistic Targets: Even if a shooting star pattern is confirmed, not every reversal that follows will be followed by a long downtrend—or even a downtrend at all. Some may be followed only by short pullbacks.
Shooting Star vs. Inverted Hammer
The shooting star and inverted hammer look alike but serve opposite functions in different market contexts. Both patterns have a small real body and a long upper shadow as well as little to no lower shadow.
Shooting Star
Appears after an uptrend
Signals buyer exhaustion and a potential reversal downward
Buyers push price up but sellers overpower, closing near the low
Inverted Hammer
Appears after a downtrend
Signals seller exhaustion and potential reversal upward
Sellers push price down but buyers regain control, closing near the open
The Bottom Line
Overall, the shooting star is a bearish candlestick that signals potential buyer exhaustion in an established uptrend. While it warns of a possible reversal, it does not mean the trend will reverse. The pattern requires confirmation through additional price action analysis.
Integrating volume analysis and technical indicators to confirm the pattern is essential for traders. Indeed, proper risk management improves the trading strategy. False signals are common in strong uptrends and low-volume markets, making it essential to assess the broader market.