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Shooting Star Chart Candlestick Pattern

The Shooting Star is a bearish candlestick pattern that appears at the end of an uptrend, signaling a potential reversal. It is characterized by a small real body, a long upper wick, and little to no lower wick. Key Features of the Shooting Star: Formation: Appears after an upward price movement. Body: Small real body near the lower end of the candlestick. Upper Wick: Long upper shadow at least twice the length of the body. Lower Wick: Very little or no lower shadow. Color: Can be either bullish (green/white) or bearish (red/black), but a bearish close adds strength to the reversal signal. Psychology Behind the Pattern: Buyers push prices higher during the session, creating the long upper wick. Sellers regain control and push prices back down near the opening price. Closing near the low suggests that buying pressure has weakened, and a potential downtrend might begin. How to Trade the Shooting Star: Confirmation: Wait for the next candle to close below the Shooting Star to confirm the reversal. Entry Point: A sell order can be placed below the Shooting Star’s low. Stop-Loss: Above the high of the Shooting Star to minimize risk. Target: Use support levels or Fibonacci retracement for profit targets. Example Scenario: If an asset is in an uptrend and a Shooting Star forms near a key resistance level, traders should be cautious of a potential reversal and may consider short positions after confirmation. Example Trade Setup Identify a Shooting Star at the end of an uptrend. Wait for the next candle to close below the Shooting Star’s low for confirmation. Enter a short position just below the confirmation candle. Place a stop-loss above the Shooting Star’s high. Set a take-profit target at the next major support level.