A shooting star is a bearish candlestick pattern that typically occurs at the top of an uptrend. It consists of a tall upper shadow, a small body, and little or no lower shadow. The name comes from the fact that the tall upper shadow looks like the tail of a shooting star.
Put another way, the candlestick pattern is a particular kind of candlestick that develops when a security opens, makes strong progress, and then ends the day close to the open once more.
A candlestick formation needs to occur during a price rise to qualify as a shooting star. Furthermore, the gap between the day’s highest price and the starting price needs to be greater than double the size of the shooting star’s body. There should be no shadow or little shadow beneath the actual body.
How to Identify a Shooting Star
To identify this candlestick pattern you must look out for the following;
- The candlestick pattern typically occurs at the top of an uptrend, given that the signal is a Shooting Star, it makes it easy for it will appear high after the price has increased rapidly,
- After an increase, the candlestick pattern appears and suggests that the price may begin to decline,
- The lower shadow need should be absent or very small,
- The body of the candlestick needs to be short,
- At least two times the length of the body is required for the upper shadow to be tall enough to indicate the extent of the change in price,
- The candlestick gets its name from the lengthy top shadow, which resembles a shooting star when joined with its small body and the position following an uptrend.
