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Bullish Candle Patterns
Bullish A-E
Abandoned baby
Pattern: Reversal
Strength: Strong
The Pattern: A long black candle is followed by a Doji that is gapping in the direction of the down trend. Then we see a white candle gapping in the opposite direction As long as the shadows of the doji and the white candle do not cross, the pattern is good.
The Psychology: This pattern definitely shows a possible rally as the bears (traders with a bearish outlook) have become tired. This does not mean that the next candle will be bullish, but it means the bears can't take it any lower. The pattern is confirmed by the next day's bullish candle.
Belt Hold
Pattern: Reversal
Strength: Weak
The Pattern: A white candle forms with no shadow beneath it and closes next to the days high
The Psychology: A Belt Hold is not rare and is not very reliable. The day's opening price holds as the low of the day and the pair trends up this means there are a lot of bulls in the market. A confirmation candle is needed before entering a position.
Breakaway
Pattern: Reversal
Strength: Medium
The Pattern: A long black candle is followed by a black candle that gaps below the first. The next two candles continue in the same direction, closing lower than the previous candles close. The final candle is a long bullish one that closes in the gap between the first and second candle.
The Psychology: In a downtrend the long white candles suggest a rise. We can see the bears getting tired as the bearish candles get smaller and smaller. There is a good chance the market will continue the bullish move at this point.
Dragonfly Doji
Pattern: Reversal
Strength: Medium
The Pattern: A Doji with little or no wick on the top side but a wick on the bottom forms inside the range of the previous candle.
The Psychology: The bears gave it everything they had but the bulls came in and stole the show pushing it back up to the open price. This is not a bullish signal until we see a bullish confirmation candle. However the longer the wick at the bottom the more likely we will see a reversal.
Engulfing
Pattern: Reversal
Strength: Medium
The Pattern: The previous bearish candle is totally engulfed by the bullish candle. This means it opened lower, rallied and closed above the previous high.
The Psychology: Bullish engulfing candles are very common but can be very powerful; it basically means that bulls are buyign like crazy.
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