The shooting star candlestick is a bearish pattern usually appearing at the end of a price uptrend. In other words, many traders decide to sell in anticipation that prices may drop. This candlestick has a short body situated near the bottom. It indicates that an asset’s price slightly decreased by the end of the trading period, even after reaching higher prices along the way, HMD (click hyperlink) which explains its red colour. A long wick that extends upwards. Analysts interpret this as a sign that there is resistance against the further increase in price, and a sell-down is imminent.

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Similar to ‘head and shoulders’, users can also see ‘wedges’ as patterns in crypto charts that involve a wider point of view. When those two lines approach each other from left to right, it is called a wedge. Wedges can be traced in a crypto chart by drawing a line that connects the lower points of price movement over a period of time to another line for the price peaks. This pattern may indicate that, as the up-and-down movement of the price is stabilising near the bottom, the asset may soon swing in a more positive direction. A bullish wedge, as shown on the right, is characterised by two lines with downward slopes that almost form a triangle pointed downwards.

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The inverse happens with a bearish pattern, which may incite some traders to sell before the potential downwards price movement. See our in-depth guide on how to read candlesticks. Of course, other traders may ‘buy the dip’, deciding to make anti-cyclical moves by buying more when prices drop if they expect a later increase. Chart patterns used by traders to anticipate price movements. Trading is, after all, a personal decision. Below are examples showing candlesticks.

Reading candlesticks and charts should not be a participant’s sole basis for forecasting the market. Seamlessly switch between TradingView charts and Crypto.com’s proprietary charts, while also accessing historical data, top NFT collections, and more. When assessing a digital asset, it’s essential for you to do your own research and due diligence to make the best possible judgement, as any purchases shall be your sole responsibility. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. All examples listed in this article are for informational purposes only. Returns on the buying and selling of digital assets may be subject to tax, including capital gains tax and/or income tax, in your jurisdiction or the jurisdictions in which you are a resident for tax purposes. Past performance is not a guarantee or predictor of future performance. The value of digital assets can increase or decrease, and you could lose all or a substantial amount of your purchase price.

By zooming out of individual candlesticks to see the general crypto charts, users can unearth even more patterns. ‘head and shoulders’, which is characterised by three peaks or valleys that show up next to each other. Meanwhile, a bearish head and shoulders pattern, like the one shaded in red on the right, may precede a price downtrend. In this pattern, the second peak or valley looks like a ‘head’ that overshadows its neighbours on both sides (the ‘shoulders’), giving this pattern its moniker. A bullish head and shoulders pattern, coloured in green on the left side of the chart, may indicate that the crypto price is about to go on an upswing.