Candlestick chart is widely used in the trading world from newbie to professionals.In the Japan the development of the candlestick journey began many years ago. They used the system to trade the rice. To say it in one sentence ,candlestick is used for monitoring the movement of the price. It is visually more appealing than just line chart. Behind the reason of the popularity of the candlestick chart is -containing so much pricing information. Not only that it gives us some powerful pattern signals by which anyone can trade with confidence. In this post i will explain only some bullish candlestick patterns which work great in any financial market. Lets begin..
1.Bullish engulfing pattern
Bullish engulfing pattern is found only after a major downtrend. An engulfing pattern shows power shifting from one party to another. After the last down candle the very next candle should be able to completely engulf the previous candle. There are some arguments in the trading worlds that the next candle should engulf the previous one with wicks ,no it should cover only body bla bla bla. But there is no magical logic behind this argument because we only need to know who are in control and then trade that way. SO we can summarize by saying that we will call a candlestick engulfing pattern when the next candle is bigger than the previous one. Lets look at the example of a perfect bullish engulfing patterns.
This is another powerful candlestick pattern. A piercing line pattern is only valid after the down trend when the new bullish candle opens its body below the previous candle and completely covers the half of the previous candle. What does it mean? It means after a long time bullish are coming hot and taking control over the market. Here is an example of valid Piercing Line two candle pattern.
Morning star pattern consist with three candlestick. One is the following trend and another two are opposite of current trend. It shows the power shifting from the sellers to the buyers in a downtrend.In between first and third candle a dozy type of candle should appear and it should open below the price of the first candle. The third candle then covers more than half way of the first candle. It is really a strong reversal signal to catch the market bottom at he right time because when a morning star appears after a major trend we can expect a new strong move against the dominant trend. Here is an example of morning star pattern.
4. Three White Soldiers
It is a candle consecutive pattern.After a long bearish trend when three white candles come together and each candle opens higher than the previous one it becomes a valid three white soldiers. Here is an example of valid three white soldiers.
It is a single and one of the best bullish candlestick patterns.It appears mostly after a significant downtrend.It looks like a hammer. It has a big tail below it body and has minimum upper tail. Changing in color is not a must have requirement like all other patterns.But make sure that the body of the candle is way more small then the shadow which indicates the market is preparing for a trend change.People say that the longer the tail the stronger the signal- which is true.You should calculate the tail size first with body before placing any trade. Normally, i will be looking for the tail which is two times larger then the body.The bottom price of the hammer candles lower tail should be the last traded price.A hammer candle clearly shows the market price decline and aggressiveness of the buyers.You can place a trade with full confidence when price crosses the upper price of the hammer candle with stoploss at the bottom of the tail.Here is an example of hammer candle.
This is a two candle pattern. Harami is a japanese word which means pregnant women.It is named harami because it looks like a pregnant women. It has a mother candle and a baby candle. It can only appears after a long downtrend. First candle is big and the second candle opens inside the range of the first big candle.When the price crosses the top of the mother candle you can place a buy trade with the stoploss below the tail of the mother candle.Here is an example of bullish harami pattern.This is another strong bullish candlestick pattern.
7.Bullish doji star
It is one of the powerful bullish candlestick patterns. As it is only a one candle pattern you don’t need to worry about validation.Because it is clearly visible in the chart. After a long down trend you should look for weakness in the market.What does it mean by weakness?well,Weakness means when the candle is not so strong and it has a large wick than actual body. A bullish doji star can be found in this types of market condition.
Normally it opens with gaps below the current market price and immediately turns back to opposite direction and again it bounces back which creates some indecision in the market.After a little bit of waiting or confirming the price action you can enter into the market and ride the entire trend reversal. here is an example of bullish doji star.
These are the best candlestick patterns you can trade with confidence. Remember-don’t just go and look blindly for candlestick patterns it may cost you a lot. A pattern is valid when this happens in an potential area like supply demand or support resistance zones.Candlestick trading is an old way of trading the financial market.You should learn first and then train your eyes in he live market to catch these pattern before missing opportunity.You can combine your trading strategy with candlestick to gain more confidence and make money. I have seen a lot of traders only use candlestick alone and making killing in this market. The beauty of trading candlestick is you can trade any market like stock,bond,future,forex,crypto etc.just train your eyes to pick those opportunity up as quick as possible. Happy trading with bullish candlestick patterns and stay with sndtrading.