Bullish candlestick patterns signal that a stock’s price is likely to rise, either continuing an uptrend or reversing from a downtrend.
5 Bullish Candlestick Patterns Every Trader Should Know
1. Hammer
The Hammer is a bullish reversal pattern that happens at the end of a downtrend.
It forms when the opening and closing prices are close to each other, with a long lower shadow that’s about twice as long as the body. The previous trend should be a downtrend.
This pattern shows that sellers tried to push the price lower, but couldn’t. A bullish candlestick after the Hammer confirms that the price is likely to rise.
2. Piercing Pattern
The Piercing Pattern is a candlestick pattern that signals a potential bullish reversal and forms near support levels at the end of a downtrend.
This pattern consists of two candles: the first is bearish with a large body, and the second is bullish. The bullish candlestick should open below the low of the bearish one and close above the middle of its body.
When trading with this pattern, investors should keep a few things in mind:
- The trend must be a downtrend since it’s a reversal pattern.
- The size of the candlesticks helps determine the strength of the reversal.
- A gap down between the bearish and bullish candles suggests how strong the reversal might be.
- The bullish candle should close above the middle of the bearish candle.
- Both candlesticks should have larger bodies for more reliable signals.
3. Bullish Engulfing
The Bullish Engulfing pattern signals a reversal to the upside, showing that buying pressure is increasing. It marks the end of a downtrend as more buyers push the price up.
The pattern has two candles: the second green (bullish) candle completely covers the body of the first red (bearish) candle.
When using this pattern, remember that the trend before it should be a downtrend. Engulfing patterns help traders spot trend reversals or even continue trends. For example, if a Bullish Engulfing pattern appears during an uptrend, it suggests the uptrend will continue.
4. The Morning Star
The Morning Star is a three-candle pattern that signals a bullish reversal. It forms at the end of a downtrend, suggesting that the trend will shift to an uptrend.
The pattern includes three candles: a bearish candle, followed by a small-bodied candle (which can be bullish or bearish), and a bullish candle.
When using the Morning Star pattern, make sure the trend before it is a downtrend.
5. Three White Soldiers
The Three-White Soldiers pattern is a bullish candlestick pattern that appears at the end of a downtrend, signaling a potential reversal to an uptrend.
It consists of three long green (bullish) candles with no long shadows.
This pattern shows strong buying pressure as all three candles open within the body of the previous one, indicating that buyers are in control.
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