Yesterday was a highly profitable day for me, and I owe it all to one key technical indicator—the Shooting Star Candlestick Pattern. In this article, I'll walk you through the strategy I used to earn $3,200 in just one day by identifying and trading using this popular pattern in technical analysis.
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What Is a Shooting Star Pattern?
A shooting star is a bearish reversal candlestick pattern that typically occurs after an uptrend. It signals that the market is potentially overbought, and sellers are likely to take control soon. The key characteristics of the shooting star are:
1. Small real body (which can be red or green), indicating a small difference between the open and close prices.
2. Long upper shadow, meaning the price went significantly higher during the day but couldn't sustain it.
3. Little to no lower shadow, showing that the bulls were not strong enough to maintain the momentum.
It resembles a star falling from the sky, hence the name. When combined with other technical tools, the shooting star can be a powerful signal for entering short positions.
My Setup for Spotting the Perfect Shooting Star
I prefer to look for shooting stars at key resistance levels after a prolonged uptrend. Yesterday, I identified such a setup in a stock that had rallied strongly for several days. The chart setup was ideal:
The stock was in an overbought condition, as indicated by the RSI being above 70.
It reached a critical resistance level that it had failed to break several times in the past.
A perfect shooting star candlestick appeared at the peak of this rally.
In the chart I analyzed, the body of the candle was very small, and the upper wick was about three times the size of the body. The wick represented the failed attempt by buyers to push the price higher, while sellers took control near the close.
Why I Took the Trade
When I saw this setup, I took action for a few reasons:
1. Confluence of signals: The overbought condition (RSI), the shooting star at resistance, and weakening bullish momentum were all aligning perfectly.
2. Risk-to-reward ratio: I could place a tight stop-loss just above the high of the shooting star and aim for a significant downside target, offering a favorable risk-to-reward ratio.
My Trading Plan
Once the shooting star was confirmed on the daily chart, I initiated the following plan:
1. Position size: I entered with a position size of $10,000 in put options, which gave me high leverage.
2. Entry point: I shorted the stock as soon as the market opened on the next day, confirming the reversal.
3. Stop-loss: I placed a tight stop-loss just above the high of the shooting star to limit my risk.
4. Target: My target was the previous support level, which provided a potential 3x reward on the risk I was taking.
The Outcome
Within a few hours, the stock dropped sharply, validating my setup. The price quickly moved in my favor, hitting my target in just one day. By the end of the trading day, I had made a total profit of $3,200 from the trade.
Key Lessons Learned
1. Patience is critical: Waiting for the perfect setup ensures that you're entering a high-probability trade.
2. Always have a plan: Before entering any trade, make sure you know your stop-loss and target levels.
3. Risk management: A tight stop-loss allowed me to control my risk while maximizing potential gains.
The shooting star pattern can be a powerful tool in your trading arsenal, especially when combined with other technical indicators like RSI and support/resistance levels. Yesterday’s success proved that following a disciplined, well-thought-out approach can lead to significant profits.

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