25 Bullish reversal candlestick pattern every trader must know and how to recognize them
Published in
10 min readFeb 4, 2022
Candlestick chart patterns are thought to have been developed in the 18th century by a wealthy Japanese businessman named Munehisa Homma to analyze the price movement of rice contracts. Thanks to the rice contracts Menehisa is inspired to make this technical method that is now widely used among technical traders. While there is an underlying connection between price and supply and demand. Candlesticks also show market emotions by visualizing the size of the candle's body, color, and the length of its shadow. Based on these patterns we can gain useful insights like if the market is bottoming or the current trend is weakening and is going to reverse. There are a number of candlestick patterns used by technical traders to spot bullish reversal, bearish reversal, or continuation patterns.
For this article, I am going to share 25 bullish reversal patterns and how to recognize them. Learning to recognize these patterns will allow you to unlock more trading opportunities, so it's definitely worth learning. It is important to note that trading with candlestick patterns alone is not advisable, combined with technical indicators like RSI and MACD and other technical indicators will make these patterns more meaningful. If you want a more complete list of candlestick patterns, download the Candlestick Patterns App on the Google play store.
#1 Long White Day
- This candle is easy to recognize because it is only composed of 1 candle.
- Made up of long body, longer than previous candles on the chart.
- The body of this candle should completely contain the previous candles on the chart.
- The long white day indicates a strong buying pressure during the trading session, signals to traders that the bulls are starting to gain control from a downtrend and a potential trend reversal may occur.
- Combine with high volume to make this pattern more meaningful.
#2 Hammer
- Looks like a letter T
- The opening price and closing price are very close to each other forming a very small candlestick body
- The lower shadow is at least twice its body size
- It has a long lower shadow, this tells us that the sellers are trying to push the price lower but the bulls manage to take control and are able to close the price higher. This indicates a potential change of the market sentiment as the buyers regain control during a downtrend.
#3 Inverted Hammer
- Little or no lower shadow
- open and close price is very close to each other, forming a very small candlestick body
- The upper shadow is about twice or more of its body size
- Looks like a Hanging Man pattern but instead, this pattern appears at the end of a downtrend.
- It has a long upper shadow, meaning there are people who are willing to buy at a higher price and the downtrend is weakening.
#4 Bullish Engulfing
- The first candle of this pattern has a smaller body
- The second candlestick completely engulf the first candlestick
- The second candlestick price opens lower than the first day and closes above the first day.
#5 Harami
- The first candle of this pattern is a bearish candle showing bearish implications
- The second candle of this pattern the price jump up from the low of the previous candle for the price to open slightly higher
- The second candle is not more than 25% the size of the first day bearish candle.
#6 Harami Cross
- This is a two price candle pattern
- The first candlestick of this pattern completely engulf the next day candle
- The second candle is a Doji candle with lower and upper shadows, about the same size on both shadows.
- The current trend must be a downtrend
#7 The Piercing Line
- Occurs at a downtrend
- The first candle of this pattern is a bearish candlestick signifying the current market trend
- The second candle opens below the closing price of the previous candle. The buyers gain momentum and manage to close the price higher within the middle of the previous candle.
#8 Doji Star
- Consist of two candlestick pattern
- The first candle is a normal bearish candle
- Second candle price gaps down and close near its opening price forming a Doji candlestick.
#9 Meeting Line
- The trend must be downtrend
- The first candlestick is a bearish candle
- The second candlestick price gaps down at the open and closes equal to the previous candlestick closing price
#10 Three White Soldiers
- Appears at a downtrend
- Three consecutive normal bullish candles like a staircase
- Each candle price must close higher to the previous candle.
#11 Morning Star
- Consist of 3 candle pattern, the first candle is a long bearish candlestick
- The second day can be a red or green candlestick with a small body
- The third day is a large bullish candlestick
#12 Morning Star Doji
- The first day of this pattern is a long bearish candlestick
- The second day is a Doji candlestick signifying market indecision
- The third day is a large bullish candle, above the second-day candle and closes at the midpoint of the first candlestick
#13 Abandoned Baby
- Three bar reversal pattern, the first candle is a long bearish candlestick
- The second candle gaps down in the direction of the primary trend, the first bar and the third bar body and shadow cannot overlap with the second candle.
- Third candle gaps up, forming a large bullish candlestick.
#14 Tri-Star
- Three candle pattern
- The main trend is a downtrend
- The first, second, and third candle is a Doji candlestick
#15 Breakaway
- This pattern is consist of 5 candlestick
- The first candle is a large bearish candlestick, followed by a three small candlestick, the second candlestick creates a gap in the direction of the main trend.
- The fifth candlestick is a large bullish candlestick that fully contains the three previous candlesticks and closes the gap between the first and second candlestick.
#16 Three Inside Up
- The first candle of this pattern is a red candle indicating the current trend
- The second candle is a small bullish candle that opens and closes within the middle of the first candle
- The third candle is bullish and closes above the first candle
#17 Three Outside Up
- The first candle of this pattern is a bearish candle
- The second candle gaps down, but manage to engulf the first candle completely at the end of the trading session
- The third candle is a bullish candle that must close above the second candle
#18 Kicking
- The current trend must be a downtrend
- Consist of two long opposite candlesticks separated by price gap
- First candlestick is a long bullish candlestick followed by a bullish candlestick that gaps up and closes above the first candle.
#19 Unique Three River Bottom
- The First is a long red candle that shows the current trend
- The second candle is a hammer candle with a long shadow that sets a new low price
- The third candle is a short green candle that does not exceed the high or low of the second candle
#20 Three Star In The South
- The market has to be in a downtrend
- The first candlestick is black, with a long real body, long lower shadow, and it lacks an upper shadow
- The second candlestick is black with a shorter real body and a low that’s higher than that of the first low candle
- The third candlestick is black with a short real body, without shadows, and a close that is within the second candle’s high-low range
#21 Concealing Baby Swallow
- The first candle must be a Black Marubozu appearing during a downtrend.
- The second candle must also be a Black Marubozu. It opens within the body of the previous candle and closes below the previous closing price.
- The first two candles are without any upper or lower shadow.
- The third candle must be a High Wave without a lower shadow. It opens below the previous closing price while its upper shadow enters the body of the previous candle.
- The fourth candle must have a black body engulfing the body and upper shadow of the previous candle.
#22 Stick Sandwich
- It consists of 3 candlestick
- Appears at a down-trending market
- The color of the second candlestick of this pattern is opposite to the first and third candle
#23 Homing Pigeon
- The current trend must be a downtrend, consisting of two candle
- The first candle is a long bearish candlestick
- The second candle gaps up and the closing and opening price is within the middle range of the first candle
#24 Ladder Bottom
- Ladder Bottom is a 5 candle bullish reversal pattern
- The first three candles are bearish candles with successive lower open and closing price
- The fourth candle resembles an inverted hammer that has a small body and long upper shadow
- The fifth candle is a long bullish candle that gaps up and opens the price above the body of the fourth candle
#25 Matching Low
- The current trend must be a downtrend
- This pattern is consist of two candlestick
- As its name suggests both candle closing price is equal
- The body size of both candles does not matter as long as both candle closing price is equal
- Have you seen two people with the same faces? That’s how rare matching low appears on the chart. This pattern signifies that the sellers cannot break that certain pricepoint, an institution or whales might be catching falling knives(the price) in that price point in two successive candles that create a matching low pattern. The low of this pattern signals traders' potential price support and a potential trend reversal.
Thank you for coming by 😊. Japanese candlestick pattern is proven to be correlated with traders' emotions, and understanding them will help you make trading decisions. To learn more about Japanese candlestick patterns, download Candlestick Patterns App on the google play store.
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