Bullish Candlestick Patterns show the downtrend reversal on the price chart. The Bullish Candlestick Patterns consist of one or two candlesticks, which means there can be single or multiple candlesticks. There are many bullish candlestick patterns, but in this post, we will learn only 7 powerful bullish candlestick patterns, which work great for me in my trading. I chose these patterns cause I understand them quickly and spot them on the chart easily, and the winning rate of this candlestick is good for me.
How to Read a Candlestick?
To fully understand the 7 Powerful Bullish Candlestick Patterns, it is important first to know how to read a candlestick. Although I have explained this in greater detail in my previous post on 35 powerful candlestick chart patterns, we will review it shortly.
A candlestick shows us four important data points in the market: opening price, closing price, high and low made by the price. The area between open and closed price is known as the body. The lines above and below the candle’s body are called shadows or wicks. The wick above the body is used to show the high made by price, and the wick below the body is used to show the low made by the price.
A single candlestick shows the price movement made by price at a particular timeframe. We can check candlestick patterns on different time frames per our trading style. For example, if we look at the 15-minute candlestick chart, the single candlestick shows the open, close, high, and low values of that particular 15-minute candlestick chart.
Red and green colors mostly represent candlesticks, in which red represents the falling price (Bearish Price Movement), and green represents the rising price (Bullish Price Movement). See the picture below to understand it clearly.
What Are Bullish Candlestick Patterns?
Bullish Candlestick Patterns are those that indicate an up-trending market. These candles are primarily shown in green color. These Candles also work as reversal candles. That’s why we can also call them bullish reversal candlestick patterns. If these candles are formed in an ongoing downtrend, the trend will change from down to up. So, traders should be cautious about their selling positions when a bullish reversal pattern appears.
7 Bullish Candlestick Patterns
The Bullish Engulfing Candlestick pattern consists of two candles. The Bullish Engulfing Candlestick Pattern forms when a bullish candle completely engulfs a bearish candle. More clearly, in this pattern, the green candle (bullish candle) completely covers the red candle (bearish candle).
Mostly bullish engulfing candlestick patterns don’t have wicks, but sometimes a little wick is okay. No wick or little wick indicates the power of the bulls. The bigger the green candle body, the healthier it will be.
This candlestick pattern works smoothly in a downtrend. On this candle, traders enter a buying position or can sell their existing short position.
Example of Bullish Engulfing Candlestick Pattern:
Hammer Candlestick Pattern
The Hammer candle pattern is a single candlestick pattern. The hammer has a small body, and the lower wick size is at least twice the size of the body. This candlestick has no upper wick, or sometimes it has a tiny upper wick, which is okay.
The stock price must be in a downtrend before the hammer forms. The color of the body does not matter, although a green body is more powerful than a red candle.
The hammer candle pattern indicates a bullish reversal, which means the downtrend is about to change to an uptrend.
The psychology behind hammer formation is that after open price, sellers try to push the price down, but suddenly, buyers come into the market and push the price up, which shows that buyers are more powerful than sellers.
Example of the Hammer Candlestick Pattern:
Inverted Hammer Pattern
The Inverted Hammer Pattern is a single candlestick pattern. It has a small body, and the upper wick size is at least twice the size of the body. This candlestick has no lower wick or sometimes a tiny lower wick, which is okay.
The stock price must be on a downtrend before the inverted hammer pattern forms. The color of the body does not matter, although a green body is more powerful than a red one.
The inverted hammer candlestick pattern indicates a reversal. It means the ongoing downtrend is about to change from down to up. The psychology behind the inverted hammer formation is that buyers try to push the price up after the open price, but sellers come and push the price down again. Still, it was unsuccessful as they could not close the price below the opening price, which shows the sellers are getting weak in the market and indicates a reversal in an ongoing downtrend.
As the name signifies, an inverted hammer is just another type of hammer; it is just a reverse hammer candle. The difference between an inverted hammer and a hammer is that this is just an upside-down version.
This candle mainly forms at the bottom of the downtrend and shows that bears are getting weaker and unable to close the price lower.
Example of Inverted Hammer Candlestick Pattern:
Bullish Harami Candlestick Pattern
The bullish harami is a bullish reversal candlestick pattern. A bullish harami pattern occurs in a downtrend and indicates that the trend will change from down to up.
This pattern consists of two candlesticks. The first candle is bearish, and the other is a small bullish candle that opens and closes inside the bearish candle.
The first red candle shows a continuation of the downtrend, and the second candle represents bulls returning in the market. When this pattern appears, traders can take buying positions after its completion.
Example of Bullish Harami Candlestick pattern:
Piercing Candlestick Pattern
The Piercing Pattern is a bullish reversal candlestick pattern. The piercing pattern indicates a reversal in an ongoing downtrend, which means when this pattern appears in a continuous downtrend, the trend will change from down to up.
The Piercing pattern consists of two candles. The first candle is bearish, representing a continuation of the downtrend, and the next candle opens the gap below the bearish candle’s closing price. Still, it covers the first bearish candle by more than 50%, which shows that bears are getting weaker in the downtrend, buyers are back, and the trend is about to change.
When this pattern forms a downtrend, traders should be cautious about their selling positions or add new buying positions.
Example of the Piercing candlestick pattern:
Morning Star Pattern
The Morning Star Pattern is a bullish reversal candlestick pattern. When the morning star candlestick pattern forms in a downtrend, it signals that the trend is about to reverse.
The morning star candlestick consists of 3 candles. The first is a bearish candle, the second is a Doji, and the third is a bullish candle representing the buyers’ power.
The psychology behind the morning star pattern is like this; the first candle shows the continuation of a downtrend. Then the second candle, the Doji candle, shows confusion between buyers and sellers, and the third candle shows that buyers are more powerful than sellers.
The morning star pattern works in a downtrend. It is a bullish reversal candlestick pattern, if this pattern appears in ongoing downtrend then trend will change to an uptrend.
Example of the morning star candlestick pattern:
White Marubozu Candlestick Pattern
The white marubozu candle is a bullish reversal candle. A white marubozu candlestick pattern occurs in a downtrend, indicating that the trend will change from down to up.
The White Marubozu candle is a healthy, bullish candlestick with no upper or lower wicks. This candle represents increasing buying pressure in the market, and bears are getting weaker, so they can’t even be able to keep the price low anymore.
Example of White Marubozu Candlestick pattern:
Things to Consider While Trading Bullish Candlestick Patterns
There are certain things you should keep in mind while trading these bullish candlestick patterns. If you keep these things in mind and trade these pattern then most probably you will trade them correctly. here are the list of things which you should consider:
- The trend should be a downtrend.
- Always trade these bullish candles on the bottom, support, or at a higher low.
- Candlestick Patterns may not always work, so use stop loss and proper risk management.
- Have a clear exit strategy to lock in profits and minimize losses if the pattern fails.
- Don’t rely on the candlestick entirely. Use other tools such as trendline, support-resistance, & price action.
I use these 7 bullish candlestick patterns mostly in my day-to-day trading. I slowly mastered them. They have an excellent win ratio but sometimes fail, so I use my risk management correctly. You should never forget to use these patterns with other tools to confirm their signal, such as support resistance, trendline, price action, etc. If you use them solely, then you might face losses.
Frequently Asked Questions (FAQs)
Which candlestick pattern is most bullish?
When it comes to candlestick patterns, the Bullish Engulfing Candlestick Pattern is often considered to be the most bullish.
What are bullish candlestick reversal patterns?
Bullish Candlestick Reversal Patterns are patterns that indicate an up-trending market and work as reversal candles. These patterns show the reversal of an ongoing downtrend and traders should be cautious about their selling positions when a bullish reversal pattern appears.