Shooting Star
Buyers launched prices skyward but sellers dragged them back down — this single candle is one of the most recognised warnings that an uptrend is failing.
Definition
A Shooting Star is a single-session bearish reversal candlestick that appears after an uptrend. It has a small real body located at the lower end of the candle, a long upper shadow at least twice the length of the body, and little or no lower shadow. The pattern is the structural inverse of the Hammer Candlestick: whereas the Hammer shows buyers rejecting lower prices, the Shooting Star shows sellers rejecting higher prices. The long upper shadow represents the intraday rally that bulls achieved but could not sustain before the close. It is also sometimes confused with the Gravestone Doji, which has no real body at all.
Why it matters
The Shooting Star is particularly significant in Indian markets when it forms at well-known resistance levels — for instance at psychological round numbers on Nifty 50 or at prior swing highs on individual stocks. It signals that the market tested higher levels but supply overwhelmed demand, which can precede a broader correction. Options traders often treat a confirmed Shooting Star as justification for buying puts or entering bear spreads, since the defined high of the shadow provides a natural level above which to place a stop. The pattern gains credibility when accompanied by above-average volume, a divergence on the RSI, or an overbought reading on the stochastic oscillator.
How it works
Three conditions define a valid Shooting Star. First, the market must have been in a prior uptrend so the pattern has reversal context. Second, the upper shadow must be at least twice the height of the real body. Third, the lower shadow should be minimal or absent. The colour of the body is secondary — a red body is marginally more bearish because the close was below the open — but even a green body qualifies if the shadow criterion is met. Traders typically wait for the session after the Shooting Star to close below the Shooting Star's low before committing to a short or hedging position, using the high of the upper shadow as the stop-loss reference.
Example
Suppose a hypothetical large-cap NSE stock has rallied from 3,400 to 3,850 over ten sessions and is approaching a prior resistance zone near 3,900. On a hypothetical session it opens at 3,860, trades as high as 3,960, but sellers overwhelm the rally and the stock closes at 3,868. The upper shadow spans 100 points while the real body is only 8 points wide — a textbook Shooting Star. The next session opens at 3,840 and closes at 3,790, confirming the reversal. A trader who entered short at 3,788 with a stop above 3,965 would have a well-defined risk level. These are illustrative figures and do not represent any actual security or market level.
Track price rejection with live data
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