The ‘Shooting Star’ is a low level two candlestick reversal pattern marked by an initial long white candle then followed by one with a long wick and a small body near its lows. It is named after the celestial shooting stars with their long trails as they drop out of the night sky. With its long wick sticking out, it is among the most widely known and misidentified candlestick pattern.
Technical Description
1) Preceded by a bullish market the first candle of the pattern should be a long white.
2) The second candlestick should open with a gap up though limited body penetration is possible.
3) A long wick should be present in the second candlestick ideally making up at least two-thirds of the days range.
4) The body for this candlestick should be small, it could be black or white but must be found at its lows.
5) Ideally there will be no tail though a very small one may be permissible.
Mark’s Perspective
Although the color for the small body in the second candlestick is irrelevant in classic candlestick charting rules, a black body with a real body gap with the first is more bearish. Black or white the longer the wick the more likely a reversal will occur though this is still a low level pattern. Shorts can be taken only if the latest candlestick gapped lower at its open or if you have a black candlestick with a lower close following the pattern. Stop losses are ideally placed above the highs of the pattern.