Investing Education: Understand 10 Bullish Candlestick Patterns That Signal Price May Rise

The rise or fall of stock market prices cannot be understood by mere rumours, speculations or social media chatter. Whether buyers or sellers are strong in the market can also be understood to some extent from the candlesticks seen in the chart. A candlestick shows the opening price, high price, low price and closing price of a stock within a certain period of time. Generally, a green candle indicates a bullish close and a red candle indicates a bearish close. But seeing a green candle doesn't mean the market will always go up. Where the candle is formed, whether the price was falling or rising before it, whether the support is close or the resistance is close, what the trading volume is should also be looked at together.

Bullish candlestick patterns are such signals, which show that the market is starting to be active by buyers or that the price is likely to go higher. Here are 10 popular bullish candlestick patterns discussed for investors to understand easily. 1. Hammer A hammer is usually a candle that appears near support after the price has fallen too far. It has a long wick at the bottom and a small body at the top. This means that even if the price falls too low in the middle of the trade, buyers will pull the price back up towards the end. This pattern may indicate that selling pressure is weakening and buyers are becoming active at lower prices. But don't immediately decide to buy just because you see a hammer. This signal is considered strong only if the next candle is also green and closes above.

2. Engulfing Bullis Bullish engulfing is a pattern formed by two candles. The first candle is red and the next large green candle covers the body of the previous red candle. This indicates that while the sellers were strong in the earlier period, the buyers have started to take control of the market in the latter period. If such a pattern is seen while the price is falling, it is considered that the market may return. Especially if this pattern is formed near the support and the trading volume has also increased, it can be understood that the buyers are really strong. But engulfing when prices have already risen too much should be viewed with caution.

3. Morning Star The Morning Star is a popular bullish reversal pattern formed by three candles. The first candle is red, indicating selling pressure. The second candle is small, indicating confusion or waiting in the market. The third candle is solid green, indicating that buyers are back. This pattern is often considered more useful when seen after a long downtrend. This may mean that fear in the market is easing and short-term buyers are becoming active. If the third green candle is strong and closes higher, the possibility of a price increase looks even stronger.

4. Piercing Pattern In a piercing pattern, the first red candle forms and the subsequent green candle closes above half of the previous red candle. This means that initially there was selling pressure in the market, but later buyers pulled the price much higher. This pattern indicates that the seller's power in the market is waning and the buyer is starting to resist. A piercing pattern forming near support after a downtrend is seen as a positive signal. But to confirm this, it is better to see if another candle has started to go higher.

5. Three White Soldiers Three White Soldiers is a pattern formed by three strong green candles in a row. Each candle closes above the previous one. This indicates that buyers are continuously active in the market and are gradually driving the price higher. If this pattern forms after a downtrend, it could be a sign that the market is starting to turn back. If the price was falling first and then three strong green candles were formed in a row, it can be understood that buyer confidence has increased. But rushing into such a pattern formed after the price has risen too high can be risky, as a short correction may occur.

6. Bullis the bastard Bullish Harami is a pattern formed by two candles. The first candle is a large red one, and the next smaller green candle sits inside the body of the previous red candle. This indicates that the selling pressure in the market is not as strong as before. This pattern does not give a sure sign that the price will rise immediately, but shows that the decline is weakening. Looking bullish in a long-term downtrend is like thinking the market is stalling. The signal is more reliable only if the subsequent candle turns green and starts to move up.

7. Dragonfly Doji Dragonfly doji has a very small candle body and a long wick at the bottom. This means that the price fell too low during the trade, but eventually the buyer drove the price back up. Such a candle can indicate buyer activity at a lower price. This pattern is especially important when seen near support. If the stock repeatedly comes close to the same level and fails to go down and there is a dragonfly doji, then there may be buyer interest at that level. But the doji itself is also a sign of confusion, so it should be confirmed by another candle.

8. Inverted Hammer In an inverted hammer candle, the upper wick is longer and the body is shorter. This is often seen after a price decline. This means that during the trade the buyer tried to push the price higher, but in the end the price could not sustain much higher. This pattern can be understood as the buyer's first attempt. This may indicate that there are still sellers in the market, but buyers are also starting to enter. If the next candle turns green and closes higher after the inverted hammer, the possibility of a bullish reversal may be strong.

9. Tweezer Bottom The low of the two candles on the tweezer bottom is almost at the same place. This means that even if the price falls to the same level, it cannot go below that level. This may indicate that buyers are active in that price zone. This pattern is more useful if formed after a downtrend. The first candle shows selling pressure, but the second candle shows a price reversal from that low. If this pattern is formed in the support area, then the market may be defending that level. Then the green candle that comes gives confirmation.

10. Rising Three Methods Rising Three Methods is a bullish continuation pattern seen in a rising market. At first, a big green candle is formed, then some small correction candles come, and then the price goes up again with a big green candle. This indicates that the main trend is still positive even though there is some profit booking or break in the market. Small candles in between may indicate that the market is not weak, but has taken a pause. The last strong green candle confirms that the buyer is active again.

If you want to learn the stock market by learning similar things, buy the investment education ebook today.