Shooting Star Candle

Courtesy of eSignal

By Investopedia

BREAKING DOWN 'Shooting Star'
Shooting stars indicate potential price tops and reversals. The shooting star candle is most effective when it forms after a series of at least three or more consecutive rising candles with higher highs. As the price rises, buyers get impatient waiting for a pull back, and leap frog over one another to purchase shares. Eventually, the buying frenzy hits a peak as the last of the immediate buyers jump into the stock (or any financial instrument) in a greed-driven panic to mark the highest high of the preceding series of candles.

Psychology of Shooting Stars
The earlier buyers eventually begin to take profits, and short-sellers enter into the stock, causing an immediate price drop after hitting a new high. The candle closes with a wick or shadow that is at least twice the size of the body. The wick or shadow represents the buyers who are immediately under water as liquidity starts to dry up. This is the potential shooting star candle. The very next candle will confirm whether it is a shooting star or a continuation candle.

Read more: Shooting Star https://www.investopedia.com/terms/s/shootingstar.asp#ixzz5OupFmKtz
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