Shooting star candlestick pattern is one of the reversal candlestick patterns that frequently appear on the chart. This candlestick pattern provides a strong signal of a bearish reversal for investors. However, it is easily confused with the inverted Hammer candlestick pattern. To help investors correctly identify the Shooting Star candlestick pattern and execute trades correctly, this Forex Trading article will provide detailed instructions. Let’s follow along!
Learn the characteristics and meaning of shooting star candlestick pattern
The shooting star candlestick pattern pattern has a similar shape to the inverted hammer candlestick pattern. Therefore, to avoid confusion and come up with an accurate trading strategy, investors need to clearly understand the characteristics of each candlestick pattern.
What does shooting star candlestick pattern mean in Forex?
Shooting Star candlestick, also known as shooting star candlestick pattern. This is one of the single Japanese candlestick patterns with a small body and a long upper wick. At least twice the length of the candle’s body. While the lower candlestick’s wick is short or almost absent.
The shooting star candlestick pattern has a similar form to the Inverted Hammer candlestick pattern. However, shooting star candlesticks often appear at the end of an uptrend. It gives a signal of a reversal from bullish to bearish. On the contrary, the inverted hammer candlestick appears at the end of a downtrend and gives a bullish reversal signal. This is an important difference between these two models that investors need to recognize.
When the Shooting Star candlestick appears at the end of an uptrend, investors can combine it with other analysis tools, such as fakey patterns. The purpose is to look for opportunities to open a potential Sell reversal order.
Outstanding features to identify Shooting Star candlesticks
Some important points to remember about the shooting star candlestick pattern include:
- The candle body is small because the closing price and opening price are close to each other. The body of a shooting star candle is usually located at the bottom of the candle.
- The lower wicks are few or very short.
- The upper candle wick is long and extends 2 – 3 times longer than the candle body. The length of the upper whisker represents the strength of the seller compared to the buyer.
- Location of appearance: The shooting star candlestick pattern only provides reliable reversal signals when appearing at the top of an uptrend or at strong resistance levels.
- The color of shooting star candles can be blue or red. However, red shooting star candles often give stronger bearish reversal signals.
- The shooting star candlestick pattern provides a more accurate reversal signal when it appears after a series of bullish candles, showing that buyers tried to push the price up but failed under pressure from sellers.

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Meaning of Shooting Star in technical analysis
Similar to other reversal candle cluster patterns, Shooting Star provides important information to help investors understand market psychology. From there, you can find reasonable entry and exit points. As follows:
- Provide entry and exit signals: The Shooting Star candlestick appears at the top of an uptrend. This is a sign of the end of the trend and the possibility of a transition to a downtrend. At that time, investors can consider closing open Buy orders or opening Sell orders. Aim to take advantage of the potential downtrend. To ensure safety, investors should confirm reversal signals with other tools. For example, technical indicators, and price models,… Or you can wait for confirmation from the next red candles.
- Understanding market psychology: The long upper wick of the candle shows that initially, the buyers tried to push the price up. However, the sellers did not accept that and they entered the market strongly to push the price down. This will make the closing and opening prices close to each other. By the end of the session, the sellers had complete control of the situation and the buyers could no longer raise the price. Therefore, meteor candles often have no or very short lower wicks.
Effective trading strategy with shooting star candlestick pattern (Shooting Star)
Although not a strong reversal candlestick pattern. But thanks to the signals that shooting stars provide, investors can still look for potential trading opportunities.
However, combining the shooting star candlestick pattern with other technical indicators is necessary. This helps determine whether the uptrend has weakened or is waiting for confirmation of the bearish signal from the next red candles. Before opening a position, be cautious and do not act hastily.
The trading strategy with shooting star candles will be implemented as follows:
Identify trends through shooting star candlestick pattern
Shooting star only gives a bearish reversal signal when it appears at the top of an uptrend. It can also appear at strong resistance areas. Therefore, to better understand the market situation, investors need to determine whether the shooting star candle appears in an uptrend or not. Is this trend showing signs of weakening?
To identify trends, investors can use support tools. For example, trendline, moving average (MA), price channel, support/resistance. Or analysis can be performed on larger time frames.


Combine with other tools in forex technical analysis
In reality, there are many cases where the shooting star pattern appears. However, the price still maintains an uptrend without a reversal occurring. Therefore, to minimize risks, investors need to combine with other indicator tools to confirm reversal signals. Such as MACD, PSAR, Bollinger Bands, Ichimoku…
Start placing orders
If all signals show that the uptrend has weakened and the market is about to reverse to a downtrend, the investor will execute a Sell order as follows:
- Entry point: At the opening price of the third candle after the next red candle after the shooting star is completed.
- Stop Loss (SL) is placed on the peak or strong resistance levels. Place 2 to 3 pips.
- Take profit with a reasonable R: R ratio of about 1:2. This means that the take profit point will be 4 to 6 pips away from the entry point.


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What should you keep in mind when trading with shooting star candlestick pattern?
When trading with Shooting Star candlesticks, investors should note the following:
- When the Shooting Star candlestick appears in red, it shows the dominance of the sellers. Candlestick patterns like this are more reliable. However, if the Shooting Star is a bullish candle (green), it can still signal a trend reversal.
- The higher the trading volume of the Shooting Star candlestick, shows the strong participation of investors at that price level. This enhances the accuracy of the Shooting Star model.
- If this candlestick pattern appears at the resistance levels or upper bands of the Bollinger Band, the reversal signal will be more reliable.
- To increase the winning rate when trading, investors should combine it with other technical analysis indicators. Includes RSI, MACD, or reversal divergence signals.


Conclude
Above Forex Trading has provided you with complete information about the shooting star candlestick pattern as well as how to trade it and things to keep in mind when trading with it. Shooting Star is considered a reliable candlestick pattern for reversal signals from an uptrend to a downtrend in technical analysis. However, to protect investment capital, investors can refer to and use other technical analysis indicators when placing trading orders.
Frequently asked questions
If a shooting star candlestick pattern appears, should I open a buy or sell order?
If a shooting star candlestick appears at the top of an uptrend, a sell order can be opened. Aiming to anticipate a potential reversal.
Can shooting star candlestick pattern be applied in short-term or long-term trading periods?
It applies to both short-term and long-term trading periods. Depending on the context of the forex market.
How to determine stop loss and take profit levels when trading with shooting star candlestick pattern?
Stop loss can be placed above the high of the shooting star candlestick or resistance levels. While take profit can be based on R:R ratio or support levels.