Bullish Candlestick Patterns
The most popular bullish candlestick patterns are:
a. Bullish Engulfing:
The Bullish Engulfing Pattern is a reversal pattern with two candles. The second candle completely engulfs the first candle's real body, regardless of the length of the tail shadows.
How to trade Bullish Engulfing Pattern?
1. Identify the more significant trend whether it is bullish
2. Wait for the formation of a Bullish Engulfing pattern on a pullback or in consolidation
3. Enter above the high of the Engulfing bar after the formation of the Bullish Engulfing Pattern
4. Stoploss below the low of Engulfing bar
b. Bullish Harami:
It is a candlestick for a bullish price reversal. When a long bearish candle is followed by a small bullish candle that lies within the first candle body, the formation occurs. Which is known as harami in Japanese, which means "pregnant."
How to trade Bullish Harami Pattern?
1. Identify the more significant trend whether it is bullish
2. Wait for the formation of a Bullish Harami pattern on a pullback or in consolidation
3. Enter above the high of the bearish candle after the formation of the Bullish Harami Pattern
4. Stoploss below the low of the Bearish bar
c. Bullish Piercing Line:
A bullish piercing line indicates a possible short-term trend reversal from a downtrend to an uptrend. The second bar's close should cover at least half of the previous candle's body.
How to trade the Bullish Piercing line?
1. Identify the more significant trend whether it is bullish
2. Wait for the formation of a Bullish Piercing pattern on a pullback or in consolidation
3. Enter above the high of the bearish candle after the formation of the Bullish Piercing Pattern
4. Stoploss below the low of the Bearish bar
d. Three white soldiers:
The pattern consists of three consecutive long-bodied candlesticks that open within the real body of the previous candle and close above the high of the previous candle. The shadows cast by these candlesticks should be short.
How to trade three white soldiers?
1. This pattern works in a downtrend as a reversal setup & in an uptrend as a continuation setup
2. Wait for the price consolidation with a minor pullback
3. Enter above the high of a third bullish bar after the formation of the pattern
4. Stoploss below the low of the first bullish bar
e. Hammer:
The hammer candlestick is a bullish reversal pattern that appears when a stock trades lower than its opening price but then rallies within the period to close near that opening price. With a long lower shadow or wick, a small or non-existent upper wick, and a small body, this candlestick resembles a hammer.
How to trade hammer pattern?
1. This pattern works in a downtrend as a reversal setup & in an uptrend as a continuation setup
2. Wait for the minor pullback or retracement
3. Enter above the high of a Hammer bar after the formation of the pattern
4. Stoploss below the low of the Hammer bullish bar
f. Morning Star:
The morning star candle is a bottom reversal signal that occurs following a prolonged downtrend. This is a three-candle reversal pattern. The first candlestick indicates a bearish trend. The body of the second candlestick is small. The third body is bullish if it closes within the first candlestick, preferably beyond the halfway point. This indicates that the bulls are taking control.
How to trade the Morning Star pattern?
1. This pattern works in a downtrend as a reversal setup
2. Enter above the high of the first bearish bar after the formation of the Morning Star pattern
3. Stoploss below the low of the second bar
g. Dragonfly Doji:
The Dragonfly Doji is a bullish reversal candlestick pattern that appears at the bottom of a downtrend. This is a three-candle reversal pattern similar to the Morningstar pattern. The difference between the two is the strong rejection second candle (Doji) in the case of the Dragonfly pattern.
How to trade the Dragonfly Doji pattern?
1. This pattern works in a downtrend as a reversal setup
2. Enter above the high of the first bearish bar after the formation of the Dragonfly Doji pattern
3. Stoploss below the low of the Doji bar
h. Tweezer Bottom:
It is a two-bar reversal pattern. Two candles with matching lows. The first bar is a bearish bar & the second bar is a bullish bar. It is a low-probability setup in a shorter time frame.