The shooting star candlestick formation is regarded as a bearish reversal pattern that typically forms at the top of an uptrend. Preceding candlesticks must be white and should have a relative large real body. The second candlestick is the star with a short black or white body that gaps away from the real body of the first candlestick. After climbing high the stock price closes near the opening price, as shown by the small real body and the large upper shadow. Typically, there is either no lower shadow or just a minor one. The upper shadow must be more than twice as long as the candlestick’s body.
The longer the shadow, the stonger the signal. It is also better if the body of the candle is black, that means the close was lower than the open, so the bears were triumphant.
The shooting star looks just like the inverted hammer except that it is bearish in nature and it appears only in an uptrend.
How to trade the shooting star candle?
Maybe this is obvious, but you need to go short as it is a bearish reversal candle. There are basically to ways to enter: either right after the candle or wait for a confirmation. In the latter case you should enter only if the following few candles close below the close of the shooting star.