Romantic Candles

Bullish Reversal Candle Arrangements


Jul.18.2013

Bullish reversal candlestick patterns can help identifying an end to a downtrend. There are a number of candlestick patterns that can help you identify a bullish reversal. Here is a list with a brief description.

 

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Bullish Reversal Candle Arrangements List

Morning Star is a name of a bullish reversal candlestick pattern used in technical analysis when trading.

Number of candles involved: 3.

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This pattern contains a long bearish candle, a Doji candle (or a spinning top), followed by a bright long bullish candle. If you look closely, the combination of the Doji cand;e and the Bullish candle looks like Venus and Jupiter early in the morning. It also resembles the transition from the dark night (the darker bearish candle) to a bright day (the brightly colored bullish candle) through the morning star (the doji candle).

Morning Star Shows her Pretty Face after a Downtrend, and Signals a Reversal to an Uptrend.

The first candle is a relatively long bearish candle that forms in the same direction as the prevailing downtrend. The middle candle can be either a doji or a spinning top, signaling indecisiveness in the market. The last candle is a relatively long bullish candle. This signals that the indecisiveness of the previous period has been resolved and that a reversal to the upside is under way.

Bullish Engulfing

A bullish engulfing candle pattern is made up of two candles. The first candle is short and bearish, and the second one is long and bullish—long enough to be able to completely cover, swallow, or “engulf” the entire previous candle!

 

[caption id="attachment_2651" align="aligncenter" width="301"]Bullish reversal candlestick patterns - Bullish Engulfing Bullish reversal candlestick patterns - Bullish Engulfing[/caption]

The shadows of the candles are fairly short, if they have any at all. Bullish engulfing patterns form during a decline or a downtrend, or where there is potential resistance. They signal that the market trend may reverse into an uptrend.

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Don’t forget to wait for confirmation of the bullish engulfing pattern before you jump into making a trade! As with most patterns, price action prior to and immediately after the bullish engulfing pattern needs to be analyzed for a confirmation of the uptrend.

 

Hammer - Bullish Reversal

A hammer is a bullish reversal pattern that happens during a downtrend. It kind of looks like a hammer that is trying to hammer out a bottom on the chart, and it signals that the price will start rising soon.

Shiny new hammer hitting the nail isolated

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The long lower shadow indicates that the forex puppet masters tried testing lower prices, but didn’t succeed. So the price closed near the open, and that is why the body of the hammer is so short.

Bullish Harami

Here is another Japanese word for you! You are going to love this one, though you may not be able to use it during your trip to Japan. Harami is an ancient Japanese word that means “the belly of a pregnant woman.”

Now let’s take a look at a bullish harami candle pattern.

Danial Fig13 10

It could be named harami because the two candles arranged next to each other resemble the belly of a pregnant woman.

To be honest with you, this could be just the reverse of a bullish engulfing pattern, but it’s good to have different ways of visualizing different patterns, as this will ultimately help us remember the patterns and identify them more easily.

So basically, a bullish harami pattern consists of a long bearish candle (the close price is lower than the open price) followed by a short bullish candle (the close price is slightly higher than the open price.)

Because the bullish harami indicates that the falling trend may be reversing, it signals that this may be a good time to open a “buy” position—that is, after you have confirmed the pattern and also consulted other points of the IDDA.

Fake Forex Party Time

On your free demo account, set your chart to the “Candlestick” pattern and set the time frame to “daily.” Go through different currency pairs and look for bullish reversal patterns. After you find one, try to confirm that it is in fact a bullish reversal indication by analyzing the chart pattern.

Do you see a double bottom, a head and shoulders bottom, or any other bullish reversal chart pattern at the place where you discovered your bullish reversal candle pattern?

If yes, place a “buy” position, wait a couple of days and see where the markets go. Was your analysis correct? Was the pattern that you identified confirmed? If yes, how many (fake) pips did you earn?

 

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