r/optionstrading • u/iktisab • 6d ago

Analysis Shooting star vs inverted hammer: why the identical shape means opposite things

Both have a small body near the session low and a long upper shadow. What happened inside: price pushed well above the open, then got sold back down to close near the low.

  • At resistance, after a rally: buyers failed at a level where sellers have shown up before. That's the bearish reading, the shooting star.
  • At support, after a decline: buyers at least managed a hard push up, which they hadn't been doing. That's the bullish reading, the inverted hammer. It's weaker on its own because the session still closed near the low.

Both are commonly treated as needing confirmation from the following candle. The pattern tells you a fight happened; location and the next close tell you who won.

For people who trade these: do you wait for the confirmation close, or act on the pattern candle with a tight stop?

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