6 Reliable Bullish Candlestick Pattern
Updated
Hello dear traders,
Here are some educational chart patterns that you must know in 2022 and 2023.
I hope you find this information educational and informative.
We are new here so we ask you to support our views with your likes and comments,
Feel free to ask any questions in the comments, and we'll try to answer them all, folks.
6 Reliable Bullish Candlestick Pattern
1) The Hammer
2) Bullish Engulfing Crack
3) Bearish Engulfing Sandwich
4) Morning Star
5) Tweezer Bottom
6) Piercing Line
1. The Hammer:-
Hammer is a bullish candlestick reversal candle.
Which is formed within the next few candles. As the price declines sharply, we anticipate a final bounce.
But how can we estimate without falling into overselling?
That's where Hammer comes into play. This gives us evidence that the selling pressure is subsiding or being absorbed. Furthermore, if the volume signature associated with the hammer candle is significant, it adds even more confidence to our thesis.
We are looking to cash in on shorts who are taking profits and covering, as well as dip buyers who are taking chances here on oversold positions. Expectation? an assembly.
Ideally, you identify a hammer candle, take a long position on a break on the upside of the candle, and set risk on the low or in the body of the hammer.
Bullish Hammer Example;-
Let’s look at a real-life example with BTC. Right off the open, BTC retests the lows from the pre-market. Once it reaches those levels, volume increases slightly as it reverses on the 5-minute chart seen here.
Visibly, there is a “shelf” forming near the low of the hammer candle’s body. The bar to the left and right is also closed and open in that price “shelf” area.
The second 5-minute chart opens with a bit of weakness, then rallies strongly above the Hammer candle.
This is your signal to go long. The break of the Hammer candle body.
Set the stop below the close of this bullish 5-minute candle.
2. Bullish Engulfing Crack:-
You can imagine that shorts will start covering given the rising price of the stock. This adds fuel to the already existing buying pressure.
The result is a bullish candlestick pattern that swallows up the bears' efforts. For the long-biased trader, the opportunity is perfect.
As is the case with any setup, we are looking for evidence to sway our confidence in either direction. The fact that the bears completely got away in this single bar is proof enough for us.
You go long on the break of the previous bar and set the stop on the low.
Bullish Engulfing Examples:-
Here's a snapshot of BTC, which provided us with a beautiful opening range breakout (ORB) opportunity right out of the gate on this particular day:
After the selloff, buyers come in and remove the selling pressure from the pre-market, engulfing the bears before moving up.
To be safe, you enter long when the red candle breaks, setting your risk at the low level or body of the first green candle.
There are some advanced traders who are more aggressive and may take their positions early if they feel a reversal is imminent.
3. Bearish Engulfing Sandwich:-
do not be confused. Just because the name says "bearish" doesn't mean it's a bearish pattern. Far from it, actually. It is often referred to as a stick sandwich.
The name is derived from the sandwiching of a "bearish engulfing" candle by two bullish candles. Thus, it is a bullish candlestick pattern in this context.
Similar to the above example of a Bullish Engulfing Crack, this pattern takes a bit longer to "move through" so to speak. Essentially an extra bar.
The perception is that the trend has reversed and we are now going down. After all, the bearish engulfing candle gives us that confidence,
If you're on the smaller side, there's hope. However, stocks don't always do what we want them to. We have to react to what the market gives us, not what we think should happen.
In this case, the Bearish Engulfing Crack is used by two bullish candles that move upwards. If you are short, hopefully, you have respected your stop loss. If you are a long-time bias, here is a good opportunity for you.
Bearish Engulfing Sandwich Example:-
After opening with a 5-minute candle chart, BTC gives a great view of it in real-time.
In this case, the right side of the sandwich acts similarly to the Bullish Engulfing Crack candlestick pattern. For all intents and purposes, you should treat your entries and risk according to the same pattern.
4. The Morning Star:-
Morning Star should gap down. It's difficult to find on an intraday basis. For this reason, we are good enough for a solid Doji candle reversal pattern.
The opening candle should be long-bodied and bearish. The middle candle is the one with the smaller body. A reversal candle is another bullish candle with a long body (usually gaping up). The close of this bullish long-bodied candle should be above the midpoint of the first candle.
Without much selling pressure, the candlestick climbs to higher prices as sellers cover and buyers take advantage of discounted stock pricing.
Morning stars can also appear as morning Doji stars. They look almost identical except for the body of the middle candle. The story of buyers and sellers remains the same.
Bullish Morning Star Example:-
You can see this in action with the BTC example below. A long-body bearish candle, followed by a narrow-body indecision candle. The bulls take control of the next candle and the rest is history.
It is worthwhile to note the volume of the first candle. We cannot assume that this is a complete recession. As you can see, there is buying pressure at lower levels. When a Doji candle is formed, it gives us confidence.
As a result, as soon as the price moves away from the lower level of the green candle; It does this in small amounts.
How can we explain that?
It took less effort to increase the price. Therefore, we can assume that the reverse is "ease of movement". This should give us confidence in our long position.
5. Tweezer Bottom:-
The Tweezer Bottom Bullish candlestick pattern consists of two candles – usually with small bodies. The first should be a red/bearish candle, and the second a green/bullish candle.
Theoretically, the Tweezer Bottom alerts the chart reader to the fact that an attempt is being made to push the price down, but to no avail. Two smaller-sized candles represent the presence of demand in the market.
Supply is being absorbed keeping candles short in the presence of selling pressure, so the volume sign will appear higher.
Entry should be taken as soon as the price breaks through the second candle. Stops can be set on the lows.
Bullish Tweezer Bottom Example:-
BTC is displaying a beautiful tweezer bottom candlestick pattern for us on the 5-minute chart. Note the narrow bodies of the two candlesticks, their symmetry, and the close range from red to green.
The volume of this first red Doji is particularly interesting. Note how high it is here. Given the context, we can interpret this as an absorption of supply.
The second candlestick (green) then rapidly decreases in volume. Thus, our thesis is confirmed that sales are absorbed and eliminated.
6. Piercing Line:-
The piercing line may look similar to a bullish engulfing pattern. The exception is that the piercing line does not completely encircle the previous candle.
It is still considered a bullish candlestick pattern as it overcame the downward momentum to close at least midway in the body of the previous candle.
It pierces the bottom line but inevitably retraces.
Bullish Piercing Line Example:-
Piercing lines may present a greater risk to reward at lower levels of support. They can also act as a spring in the trading range.
This 5-minute chart of BTC shows the combination of an opening range breakout (ORB) with a piercing line. Together, it's a combination that can really add confidence to our entryways.
As with any setup, the more evidence we have to confirm our bias and plan, the better. For this reason, it is always good to ask yourself:
Are the trends in my favor?
Is it time for a change?
Does the volume confirm my thesis?
Is the stock in an area of support or resistance?
Are the multiple timeframes in line with my view?
Trade with care.
If you like our content, please feel free to support our page with a like, comment
Hit the like button if you like it and share your charts in the comments section.
Thank you
Here are some educational chart patterns that you must know in 2022 and 2023.
I hope you find this information educational and informative.
We are new here so we ask you to support our views with your likes and comments,
Feel free to ask any questions in the comments, and we'll try to answer them all, folks.
6 Reliable Bullish Candlestick Pattern
1) The Hammer
2) Bullish Engulfing Crack
3) Bearish Engulfing Sandwich
4) Morning Star
5) Tweezer Bottom
6) Piercing Line
1. The Hammer:-
Hammer is a bullish candlestick reversal candle.
Which is formed within the next few candles. As the price declines sharply, we anticipate a final bounce.
But how can we estimate without falling into overselling?
That's where Hammer comes into play. This gives us evidence that the selling pressure is subsiding or being absorbed. Furthermore, if the volume signature associated with the hammer candle is significant, it adds even more confidence to our thesis.
We are looking to cash in on shorts who are taking profits and covering, as well as dip buyers who are taking chances here on oversold positions. Expectation? an assembly.
Ideally, you identify a hammer candle, take a long position on a break on the upside of the candle, and set risk on the low or in the body of the hammer.
Bullish Hammer Example;-
Let’s look at a real-life example with BTC. Right off the open, BTC retests the lows from the pre-market. Once it reaches those levels, volume increases slightly as it reverses on the 5-minute chart seen here.
Visibly, there is a “shelf” forming near the low of the hammer candle’s body. The bar to the left and right is also closed and open in that price “shelf” area.
The second 5-minute chart opens with a bit of weakness, then rallies strongly above the Hammer candle.
This is your signal to go long. The break of the Hammer candle body.
Set the stop below the close of this bullish 5-minute candle.
2. Bullish Engulfing Crack:-
You can imagine that shorts will start covering given the rising price of the stock. This adds fuel to the already existing buying pressure.
The result is a bullish candlestick pattern that swallows up the bears' efforts. For the long-biased trader, the opportunity is perfect.
As is the case with any setup, we are looking for evidence to sway our confidence in either direction. The fact that the bears completely got away in this single bar is proof enough for us.
You go long on the break of the previous bar and set the stop on the low.
Bullish Engulfing Examples:-
Here's a snapshot of BTC, which provided us with a beautiful opening range breakout (ORB) opportunity right out of the gate on this particular day:
After the selloff, buyers come in and remove the selling pressure from the pre-market, engulfing the bears before moving up.
To be safe, you enter long when the red candle breaks, setting your risk at the low level or body of the first green candle.
There are some advanced traders who are more aggressive and may take their positions early if they feel a reversal is imminent.
3. Bearish Engulfing Sandwich:-
do not be confused. Just because the name says "bearish" doesn't mean it's a bearish pattern. Far from it, actually. It is often referred to as a stick sandwich.
The name is derived from the sandwiching of a "bearish engulfing" candle by two bullish candles. Thus, it is a bullish candlestick pattern in this context.
Similar to the above example of a Bullish Engulfing Crack, this pattern takes a bit longer to "move through" so to speak. Essentially an extra bar.
The perception is that the trend has reversed and we are now going down. After all, the bearish engulfing candle gives us that confidence,
If you're on the smaller side, there's hope. However, stocks don't always do what we want them to. We have to react to what the market gives us, not what we think should happen.
In this case, the Bearish Engulfing Crack is used by two bullish candles that move upwards. If you are short, hopefully, you have respected your stop loss. If you are a long-time bias, here is a good opportunity for you.
Bearish Engulfing Sandwich Example:-
After opening with a 5-minute candle chart, BTC gives a great view of it in real-time.
In this case, the right side of the sandwich acts similarly to the Bullish Engulfing Crack candlestick pattern. For all intents and purposes, you should treat your entries and risk according to the same pattern.
4. The Morning Star:-
Morning Star should gap down. It's difficult to find on an intraday basis. For this reason, we are good enough for a solid Doji candle reversal pattern.
The opening candle should be long-bodied and bearish. The middle candle is the one with the smaller body. A reversal candle is another bullish candle with a long body (usually gaping up). The close of this bullish long-bodied candle should be above the midpoint of the first candle.
Without much selling pressure, the candlestick climbs to higher prices as sellers cover and buyers take advantage of discounted stock pricing.
Morning stars can also appear as morning Doji stars. They look almost identical except for the body of the middle candle. The story of buyers and sellers remains the same.
Bullish Morning Star Example:-
You can see this in action with the BTC example below. A long-body bearish candle, followed by a narrow-body indecision candle. The bulls take control of the next candle and the rest is history.
It is worthwhile to note the volume of the first candle. We cannot assume that this is a complete recession. As you can see, there is buying pressure at lower levels. When a Doji candle is formed, it gives us confidence.
As a result, as soon as the price moves away from the lower level of the green candle; It does this in small amounts.
How can we explain that?
It took less effort to increase the price. Therefore, we can assume that the reverse is "ease of movement". This should give us confidence in our long position.
5. Tweezer Bottom:-
The Tweezer Bottom Bullish candlestick pattern consists of two candles – usually with small bodies. The first should be a red/bearish candle, and the second a green/bullish candle.
Theoretically, the Tweezer Bottom alerts the chart reader to the fact that an attempt is being made to push the price down, but to no avail. Two smaller-sized candles represent the presence of demand in the market.
Supply is being absorbed keeping candles short in the presence of selling pressure, so the volume sign will appear higher.
Entry should be taken as soon as the price breaks through the second candle. Stops can be set on the lows.
Bullish Tweezer Bottom Example:-
BTC is displaying a beautiful tweezer bottom candlestick pattern for us on the 5-minute chart. Note the narrow bodies of the two candlesticks, their symmetry, and the close range from red to green.
The volume of this first red Doji is particularly interesting. Note how high it is here. Given the context, we can interpret this as an absorption of supply.
The second candlestick (green) then rapidly decreases in volume. Thus, our thesis is confirmed that sales are absorbed and eliminated.
6. Piercing Line:-
The piercing line may look similar to a bullish engulfing pattern. The exception is that the piercing line does not completely encircle the previous candle.
It is still considered a bullish candlestick pattern as it overcame the downward momentum to close at least midway in the body of the previous candle.
It pierces the bottom line but inevitably retraces.
Bullish Piercing Line Example:-
Piercing lines may present a greater risk to reward at lower levels of support. They can also act as a spring in the trading range.
This 5-minute chart of BTC shows the combination of an opening range breakout (ORB) with a piercing line. Together, it's a combination that can really add confidence to our entryways.
As with any setup, the more evidence we have to confirm our bias and plan, the better. For this reason, it is always good to ask yourself:
Are the trends in my favor?
Is it time for a change?
Does the volume confirm my thesis?
Is the stock in an area of support or resistance?
Are the multiple timeframes in line with my view?
Trade with care.
If you like our content, please feel free to support our page with a like, comment
Hit the like button if you like it and share your charts in the comments section.
Thank you
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1. The Hammer:-Note
2. Bullish Engulfing Crack:-Note
3. Bearish Engulfing Sandwich:-Note
4. The Morning Star:-Note
5. Tweezer Bottom:-Note
6. Piercing Line:-Trade active
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