Top 5 Bullish Candlestick Patterns With Examples

Although the pattern rarely appears on the chart, it tends to be reliable. When you trade this pattern, the key to success is to find candlesticks with equal lows that appear at the end of a downtrend. This is an extended bullish harami pattern discovered by Gregory Morris.

A stop loss is commonly placed below the low of the first candlestick. For instance, if the closing price is higher than the opening price, the body is typically colored or shaded in a way that indicates bullish movement, often in green or white. Conversely, if the closing price is lower than the opening price, the body is usually colored to signify a bearish movement, often in red or black. The more often you look through the chats, the easier it will be for you to spot reversal patterns and act on them. This situation is similar to when the bullish harami occurs, but the second candlestick is doji.

Bearish harami

Three rising tall white candles, bullish reversal candlestick patterns with partial overlap and each close near the high. You can see that this pattern looks very much like the “morning doji star” pattern. The body of the second candle is completely contained within the body of the first one and has the opposite color. Traders often enter the market on the open price of the first candle after the engulfing and place a stop-loss order above the second candle’s high.

False breaks and unsuccessful patterns are prevalent in sideways and consolidating markets. Candlesticks are most effective when they are used in conjunction with other indicators that verify the validity and strength of the pattern. The probability of candlestick signals could be enhanced by employing volume, momentum oscillators, and moving averages. The image above displays a daily candlestick chart for the EUR/USD forex pair.

Similar to the engulfing pattern, the Piercing Line is a two-candle bullish reversal pattern, also occurring in downtrends. However, moving averages and the Relative Strength Index (RSI) are popular indicators to confirm trend reversals. They help identify the change in the market momentum, supporting the signals given by reversal candle patterns. As with the piercing line structure, the length of the candles and the gap between them signals the strength of the trend reversal. Traders wait for another bearish candle to be formed after the pattern.

1. Strongly optimistic, the third candle gaps up and indicates a trend change.
2. The hammer and hanging man are two single-candle patterns that indicate potential reversals, but they appear in opposite trend conditions.
3. Gap between two bearish candles, indicating strong selling pressure and continuation of the downtrend.
4. The first day formed a long white candlestick, while the second formed a small black candlestick that could be classified as a doji.

The Tweezer Bottom is a bullish reversal pattern that signals a potential end of a downtrend. The color or shading of the candlestick body typically reflects whether the price closed higher (bullish) or lower (bearish) than it opened. According to Gregory Morris, the third candlestick that closes below the second’s closing price is so important that it should be part of the bearish harami pattern. A quite common bullish pattern that signals the reversal to the upside.

The Morning Star Pattern

The psychology behind the Mat Hold pattern reflects a brief period of consolidation or indecision in the market, where the opposing force attempts to reverse the trend but fails. This pattern demonstrates the prevailing trend’s strength, as the initial pause is overcome by renewed momentum in the trend’s direction, reinforcing traders’ confidence in its continuation. Candlesticks consist of the open, high, low and close prices for a specific period. The thick rectangular ‘body‘ represents the range between the open and close. The coloring of the body conveys whether the close was higher than the open, which is often indicated by green or white, or lower than the open, typically represented by red or black. A long bullish candle followed by three smaller bearish candles, and then another bullish candle closing higher.

Bearish harami cross

At this point, there isn’t a clear area of value suggesting a price reversal, making it challenging to consider a short trade. This doji reflects the idea that price has tried to move lower and failed, but it has also struggled to move higher. The most crucial aspect of the Bullish Engulfing pattern is the second candle.

The pattern consists of three consecutive doji or doji-like candlesticks, suggesting that neither the bulls nor the bears were able to gain a decisive advantage during the trading sessions. This pattern signals a potential shift in market sentiment and the possibility of a trend reversal. The doji pattern is formed when the market is in a state of indecision, with neither the bulls nor the bears able to gain a clear upper hand. This indecision in the doji pattern is reflected in the opening and closing prices being almost identical, resulting in a candlestick with an extremely small or nonexistent body. This pattern suggests a potential shift in market sentiment and a possible reversal in the immediate future.

The color of the hammer doesn’t matter, though if it’s bullish, the signal is stronger. Candlesticks are so named because the rectangular shape and lines on either end resemble a candle with wicks. Each candlestick usually represents one day’s worth of price data about a stock.

Bullish Triple Gap

This pattern suggests a potential pause or reversal in the current trend. After the first candlestick, the second opens within the body of the first one and closes above it. The third candlestick should open within the body of the second one and close above it. There are more of them in reality, but they rarely appear on the charts.

1. When interpreted correctly, these patterns can provide excellent opportunities for you to enter the market at the initial stages of a new uptrend.
2. The three-outside-up pattern consists of a bearish candlestick, followed by a larger bullish candlestick that engulfs the previous one and another bullish candlestick that closes higher.
3. It looks similar to the hammer, but it forms after a period of rising prices.
4. The gaps are not an absolute must for this pattern but the reversal signal will be stronger if they are present.
5. Recognizing candlestick patterns like the Dragonfly Doji helps traders anticipate potential trend reversals.
6. It indicates indecision in the market, with both buyers and sellers unable to gain the upper hand.
7. White/white and white/black bullish harami are likely to occur less often than black/black or black/white.

Bullish Reversal Candlestick Patterns

Traders look for signs of a reversal after the third gap, such as an Engulfing bullish candlestick. To potentially manage risk, a stop loss is typically placed below the lowest point of the pattern. The Three Gaps formation is valuable as it highlights market exuberance that could precede a reversal. The Three White Soldiers pattern is a bullish reversal signal that typically forms after a downtrend. This formation signals increasing market confidence and potential further price advances.

Strong bearish candle that gaps down and indicates a trend change is the third candle. A hammer candlestick pattern is a single candlestick pattern that suggests a potential reversal of the overall bullish trend. A hammer is produced when a candle has a very short or no body and leaves a long, weak one on its lower side. This candlestick pattern is a strong indication of the potential trend reversal. Traders use this pattern to set up stop losses below the doji or the bullish candle.