How to Use Shooting Star Candlestick Pattern to Find Trend Reversals

The shooting star candlestick pattern is a single candle formation used by crypto traders to identify bearish reversals. Crypto traders who long the market use the shooting star pattern to identify when to exit their positions. Other crypto traders may use the pattern to identify short entries into the crypto market.

Crypto traders love this pattern because it’s easy to spot, then trade its signals. When the pattern is used in conjunction with other tools like Fibonacci retracements or other trend line resistance levels, it can create strong signals.

What Is a Shooting Star Candlestick Pattern?

A shooting star candlestick pattern occurs when an appreciating asset abruptly reverses lower, leaving behind a long upward wick. It is viewed as a bearish reversal candlestick pattern. This pattern often appears at the top of uptrends.

The psychology behind the pattern can be a little complex. First, traders see an uptrend with the continued strengthening of prices. Nervous traders on the sidelines watching the price appreciate worry that they might miss out. Due to this “FOMO,” traders then buy into the market, pushing the pricing even higher. This effectively attracts bullish traders into the market, which becomes a strong setup for a reversal.