Inverted hammer and shooting star patterns.
An inverted hammer and a shooting star are the same candle: a small body near the low and a long upper wick, usually at least twice the body. After a fall it is an inverted hammer, a possible turn up. After a rise it is a shooting star, a possible turn down. Both need a confirming close.
A candle opens, buyers push the price far higher, and by the close nearly all of that gain has gone. What remains is a small body near the bottom of the candle with a long wick pointing up.
That shape has two names. After a fall it is an inverted hammer, and after a rise it is a shooting star. Either one is a warning that needs a second candle before it means much.
What does the candle look like?
You can spot the shape from three features:
- A small body, green or red, in the lower part of the candle's range.
- A long upper wick, usually at least twice the length of the body.
- A short lower wick, or none at all.
It is the mirror image of the hammer and hanging man, which carry their long wick below the body. If bodies and wicks are still new, how to read a candlestick covers them first.
The twice-the-body rule is a convention, and chart tools draw the line in slightly different places. If the open and close are equal and sit at the low, the candle is a gravestone doji, a close relative.
The long wick records a failed push. Price traded much higher during the period, then sellers drove it back down before the close.
So the candle shows that higher prices were rejected once. On its own it says nothing about what the next candle will do.
Why does the same candle get two names?
Location decides the name. The candle can look identical in both cases, and the difference is the move that came before it.
An inverted hammer forms after a decline. It suggests buyers have started testing higher prices, even though they could not hold them this time.
A shooting star forms after a rise. Buyers reached for a new high and sellers pushed them back, which can be an early sign that the rise is tiring.
How long the prior move must be is a judgement call. Three or more candles in one direction, or a clear run into a support or resistance level, is a reasonable working rule.
You will see a green inverted hammer or a red shooting star described as stronger, because the close leans toward the expected turn. The evidence for that is thin, so treat colour as a minor detail.
How do you measure a shooting star?
Say EUR/USD has risen for four hours in a row on the one-hour chart. The next candle prints these round illustrative prices:
| Open | High | Low | Close |
|---|---|---|---|
| 1.10450 | 1.10800 | 1.10350 | 1.10400 |
Measure each part in pips. On EUR/USD one pip is 0.0001.
- Body: 1.10450 minus 1.10400 = 0.00050, or 5 pips. It is red because it closed below the open.
- Upper wick: the high minus the top of the body, 1.10800 minus 1.10450 = 0.00350, or 35 pips.
- Lower wick: the bottom of the body minus the low, 1.10400 minus 1.10350 = 0.00050, or 5 pips.
- Full range: 1.10800 minus 1.10350 = 0.00450, or 45 pips. As a check, 35 + 5 + 5 = 45.
The upper wick is 35 ÷ 5 = 7 times the body, well past the twice-the-body rule. The top of the body is 10 pips above the low, about 22% of the way up the range, so the shape qualifies.
Yen pairs use the same steps with a pip of 0.01. A USD/JPY candle after a fall that opens at 148.20, reaches 148.90, dips to 148.15 and closes at 148.30 is an inverted hammer.
Its body is 148.30 minus 148.20 = 10 pips, its upper wick is 148.90 minus 148.30 = 60 pips, and its lower wick is 148.20 minus 148.15 = 5 pips. The upper wick is six times the body.
How do you confirm the signal?
A single candle shows one rejected push. Confirmation is the next candle showing that price is actually turning.
For a shooting star, a common test is a close below the star's body. A stricter test is a close below the star's low. For an inverted hammer, flip both: a close above the body, or above the high.
The stricter test filters out more weak signals, but it gets you in later and at a worse price. Neither is right for everyone, so compare them on your own charts before choosing.
Back to EUR/USD. The next candle opens at 1.10400, falls to 1.10210 and closes at 1.10250. That close is below the star's low of 1.10350, so both tests are met.
Suppose, as an example only, that you sell 0.10 lot at 1.10250 and place the stop 2 pips above the star's high:
- Stop: 1.10800 + 0.00020 = 1.10820.
- Distance: 1.10820 minus 1.10250 = 0.00570, or 57 pips.
- Pip value on 0.10 lot of EUR/USD in a USD account: 10,000 × 0.0001 = $1.
- Loss if the stop is hit: 57 × $1 = $57, plus any slippage or commission.
Waiting for confirmation has a cost in distance. Selling at the star's own close of 1.10400 would have put the same stop 42 pips away, so waiting added 15 pips of risk in exchange for more evidence.
MetaTrader draws candles from the bid price by default, while the stop on a short position closes with a buy at the ask. The 2 pips above the high give the spread some room.
To turn a stop distance into a trade size, use the pip value calculator together with the lesson on how much to risk per trade.
Where do these candles fail?
A long upper wick in the middle of a sideways range is ordinary back-and-forth trading. Without a prior move to reverse, the shape carries little meaning.
Strong trends produce shooting stars that lead nowhere. A rising market can print several in a row, each followed by a new high, and a short on each one with a stop just above the star's high would have been stopped out.
Timeframe changes the picture. A shooting star on a 5-minute chart covers a few minutes of trading, and it can disappear inside one ordinary candle on the hourly chart.
Daily candles depend on your broker's server clock. Each day starts at the broker's midnight, so two brokers on different server times can draw different daily candles from the same prices.
Definitions written for stock charts often require a gap before the candle. Currency pairs trade around the clock on weekdays, so gaps are rare outside weekend opens, and that condition is usually dropped for forex.
Published tests of single candlestick patterns have given mixed results, and a pattern that looked useful on one market or period has often failed on another. Treat these candles as a reason to look closer, never as a full trade.
Two-candle patterns build some of the confirming into the pattern itself, and the next lesson covers the best known of them, bullish and bearish engulfing patterns.
Questions
Is a shooting star bullish or bearish?
It is a bearish warning: it appears after a rise and suggests the rise may be stalling. It still needs a confirming candle, because plenty of shooting stars are followed by further gains.
What is the difference between an inverted hammer and a shooting star?
Only the location differs. Both have a small body near the low and a long upper wick, and the inverted hammer follows a decline while the shooting star follows a rise.
What is the difference between a shooting star and a hanging man?
Both appear after a rise and warn of a possible top. The shooting star has its long wick above the body, and the hanging man has it below.
Does the colour of the body matter?
A little at most. Where the candle forms and whether the next candle confirms it count for much more than whether the body is green or red.
How long should the upper wick be?
A common rule is at least twice the body, with a short or missing lower wick. The exact threshold varies between chart books and screening tools, so pick one and apply it consistently.
Keep learning
Chapter 2How to read a candlestick.A candlestick shows four prices for one trading period: the open, high, low and close. The thick body runs from open to close, and the thin wicks reach the high and the low. A candle that closed above its open is bullish, usually green, and one that closed below is bearish, usually red.
Chapter 2What candle bodies and wicks tell you.A candle's body shows the move from open to close, and its wicks show prices reached but not kept. A long body means price moved far and held it; a short body means open and close ended near each other. A long lower wick shows a drop bought back, and a long upper wick a rise sold off.
Chapter 2Spinning tops and marubozu candles.A spinning top is a candle with a small body and wicks on both sides longer than the body, showing that buyers and sellers ended the period roughly even. A marubozu is the opposite: a long body with little or no wick, showing one side controlled the period from open to close. Neither predicts the next move alone.
Chapter 2Doji candles and what they signal.A doji is a candle that opens and closes at almost the same price, so its body is a thin line. It shows buyers and sellers ended the period even. The four common types are standard, long-legged, dragonfly and gravestone. A doji alone is a weak signal; context and the next candle matter.
Chapter 2Hammer and hanging man patterns.A hammer and a hanging man are the same candle: a small body near the top and a lower wick at least twice as long. After a fall it is a hammer, a hint that selling may be fading. After a rise it is a hanging man, a warning that buying may be tiring. Each needs a confirming next candle.
Chapter 2Bullish and bearish engulfing patterns.An engulfing pattern is a two-candle reversal signal. A bullish engulfing forms after a decline, when a rising candle's body completely covers the previous falling candle's body. A bearish engulfing is the mirror image after a rise. It suggests control has switched sides, but it often fails in ranges and means more at a support or resistance level.
Chapter 2Tweezer tops and bottoms.A tweezer top is two candles, usually side by side, that reach almost the same high after a rise. A tweezer bottom is two candles with almost the same low after a fall. Both show a price the market rejected twice. They mean most at a known level and are weak signals on their own.
Chapter 2Morning star and evening star patterns.A morning star is a three-candle pattern at the end of a fall: a long bearish candle, a small-bodied star near the low, then a long bullish candle that closes above the first candle's midpoint. An evening star is the mirror image after a rise. Both suggest a possible reversal, and neither guarantees one.
Chapter 2Three white soldiers and three black crows.Three white soldiers is three bullish candles in a row after a decline, each closing higher and near its high. Three black crows is the bearish mirror after a rise. Both suggest one side has taken control, but they often appear after a large move, can fail, and are best read with the trend and a planned stop.
Chapter 2Three inside up and three inside down.Three inside up is a three-candle bullish reversal pattern: a long bearish candle, a small bullish candle whose body sits inside it, then a bullish candle that closes above the first candle's open. Three inside down is the mirror image after a rise. Both are a harami plus a confirming candle, and neither is a reliable signal on its own.
Chapter 2Candlestick patterns cheat sheet.A candlestick pattern is a shape made by one, two or three candles that hints at who controlled price. Single candles such as the doji, hammer and shooting star show rejection or indecision. Two- and three-candle patterns such as engulfing and morning star show a shift. None predicts price reliably on its own.
