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Shooting Star - Bearish Reversal Signal

Learn about the Shooting Star candlestick pattern, how to identify it, and how to trade the bearish reversal signal in the forex market.

Mark · Trader & Founder, Social Forex

Shooting Star - Bearish Reversal Signal

Definition

A Shooting Star is a bearish reversal candlestick pattern that typically appears at the end of an uptrend. It signals that buying pressure is weakening and sellers are starting to gain control of the market.

How to Identify

A Shooting Star candle has the following characteristics:

  • A small real body located near the bottom of the candle.
  • A long upper shadow, at least twice the length of the body.
  • Very little or no lower shadow.
    • Resistance ZoneSmall bodyLong upper wickBuyers pushed high but sellers overwhelmed — bearish rejection

    This shape indicates that buyers pushed the price higher during the session, but then sellers stepped in aggressively and drove the price back down close to the opening level. The result is a long upper shadow, reflecting a rejection of higher prices.

    How to Trade the Shooting Star

    To trade this signal safely, you should wait for confirmation from the next candle:

  • Entry (Sell): When the price closes below the low of the Shooting Star or below the low of the confirming candle (usually a bearish candle).
  • Stop Loss: Place a few pips above the upper shadow of the Shooting Star.
  • Take Profit: Target the nearest support zone or use a favorable risk-reward ratio.

    • Real-world example: On the EUR/USD H4 chart, after a prolonged uptrend, a Shooting Star appeared at the 1.1000 resistance level. The next candle was a strong bearish candle, confirming the signal. After entering a sell trade, the price dropped to 1.0900, yielding a significant profit.

    Common Mistakes When Trading the Shooting Star

  • Entering too early: Many beginners sell immediately upon seeing a Shooting Star without waiting for confirmation, leading to losses if the price continues to rise.
  • Confusing with other patterns: Not every candle with a long upper shadow is a Shooting Star. It must appear at the top of an uptrend.
  • Ignoring risk management: Not placing a stop loss or setting it too far, resulting in high risk.
  • Trading against the trend: Without a clear prior uptrend, the signal is less reliable.

    • Content is for reference only, not investment advice. Forex trading carries high risk.

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