The Shooting Star and Hanging Man are powerful bearish candlestick patterns. However, most traders misuse them by ignoring one critical factor — location.
In this guide, you’ll learn how to properly trade these patterns at resistance for high-probability setups.
What Is a Shooting Star?
A Shooting Star is a bearish reversal candlestick that appears after an uptrend.
Key Characteristics:
- Long upper shadow
- Small real body near the bottom
- Little to no lower shadow
It shows strong rejection of higher prices.
What Is a Hanging Man?
A Hanging Man also appears at the top of an uptrend and signals potential weakness.
Key Characteristics:
- Long lower shadow
- Small body near the top
It indicates selling pressure starting to enter the market.
The Most Important Rule: RESISTANCE
These patterns only become reliable when they form at a key resistance level.
Bearish Setup at Resistance
When either pattern forms at resistance:
- Buyers fail to push price higher
- Sellers begin to take control
- Price shows rejection
This creates a potential short (sell) opportunity
How to Trade the Setup
Step 1: Identify Resistance
- Previous highs
- Supply zones
- Key levels
Step 2: Wait for the Pattern
- Shooting Star OR Hanging Man
Step 3: Wait for Confirmation
Do NOT enter immediately.
Enter only when:
- Next candle closes bearish
OR - Price breaks below the pattern low
Entry, Stop Loss, Take Profit
Entry:
- Break of the pattern low
Stop Loss:
- Above the high of the candle
Take Profit:
- Next support level
- Risk at least 1:2
Common Mistakes
- Trading without resistance
- Entering too early
- Ignoring confirmation
- Confusing pattern location
Final Summary
The Shooting Star and Hanging Man are strong bearish signals — but only when used correctly.
Key Takeaways:
- Must appear at resistance
- Require confirmation
- Should be part of a structured setup
Focus on location. Wait for confirmation. Trade with discipline.
Want to learn bullish setups?
Read here: Hammer & Inverted Hammer Strategy
Learn all Doji types here: Doji Candlestick Types Guide
About the Author
David William – Professional Forex & Crypto Trader
More trading insights at trading-strategy-hub.com
Disclaimer: This analysis is for educational purposes only and does not constitute financial advice.