Chart Analysis · Lesson 18 · Beginner
Bullish Candlestick Patterns: the Catalog
You recognize the most important bullish candlestick patterns from their profiles and know for each how reliable it really is and when to ignore it.
With a free account: interactive chart exercises, quizzes with answers, progress and XP.
A catalog for recognition
Here you find the bullish candlestick patterns as profiles. The focus is on recognizing the shape. The decisive rule stays the same in every case: a bullish reversal is only a signal in a downtrend, otherwise not. Why that is so is covered in the lesson ct-candlestick-kontext, we do not repeat it here.
For each pattern there is a short text that shows what the profile itself does not show: how reliable the pattern is and when you are better off ignoring it.
Interactive exercise: here you learn right on the chart, with feedback on every click. Sign up freeto start it.
The Hammer is moderately reliable and only valid after a clear sell-off. In an uptrend or in a range the same candle is meaningless. Wait for confirmation from the next candle, which closes above the hammer body, before you trade.
Interactive exercise: here you learn right on the chart, with feedback on every click. Sign up freeto start it.
The Inverted Hammer is weaker than the Hammer and is often confused with the bearish Shooting Star, because the shape is the same, only the context tells them apart. Without a confirming green follow-up candle the signal is thin, do not trade it in isolation.
Interactive exercise: here you learn right on the chart, with feedback on every click. Sign up freeto start it.
The Dragonfly Doji is the strong doji variant at the bottom: open and close are at the top, the long lower wick shows a clearly rejected sell-off. It rarely appears clean. Watch for elevated volume, without it it stays just an indecision candle. More on doji variants in ct-candle-patterns-neutral.
Interactive exercise: here you learn right on the chart, with feedback on every click. Sign up freeto start it.
The Bullish Engulfing is one of the more reliable two-candle patterns, because the green body completely engulfs the red prior day. The larger the engulfing body relative to the prior day, the stronger the signal. There are still failure rates, a pattern is never a guarantee.
Interactive exercise: here you learn right on the chart, with feedback on every click. Sign up freeto start it.
The Piercing Line is the weaker sister of the Engulfing. It only counts if the green candle reclaims more than half of the red prior body. If it closes below that, it is not a valid pattern, only a weak bounce.
Interactive exercise: here you learn right on the chart, with feedback on every click. Sign up freeto start it.
The Morning Star is a three-candle pattern and therefore more reliable than a single candle: long red body, small indecision body at the low, then a strong green body. It is rarely perfectly formed. What matters is the small middle body and the strong third candle.
Interactive exercise: here you learn right on the chart, with feedback on every click. Sign up freeto start it.
Three White Soldiers are three strong green candles in a row and a powerful sign of a trend change. The catch: by the time you spot them the move is often already done and the market is short-term overbought. Long upper wicks on the soldiers warn of fading strength.
Test yourself
Small body, long lower wick, hardly any upper wick, right after a sell-off. Which pattern is this?
- A Hammer
- A Shooting Star
You see a clean Bullish Engulfing in the middle of an intact uptrend. What do you do?
- Ignore it, a bullish reversal needs a downtrend before it
- Go long, Engulfing is always bullish
Sign up free for the answers with an explanation for each option.
The key points at a glance
- This lesson is the recognition catalog, you learn the context rule in ct-candlestick-kontext.
- A bullish reversal only counts after a downtrend, in an uptrend the same shape is meaningless.
- More candles in the pattern means more confirmation: Morning Star and Three White Soldiers are stronger than a single candle.
Deep dive
How reliable are candlestick patterns really?
Candlesticks are short-term signals that rarely carry a trade on their own. A candle only shows one period of struggle, often revised in the very next one. That is why two hard rules apply, without which most of it is just indecision.
- Confirmation: only trade once the following candle closes above the reversal body
- Context: a bullish reversal only counts after a clear downtrend
- The same candle in an uptrend or a range is meaningless
Ranking: from the single candle to the three-candle pattern
More candles mean more confirmation. Single candles are weak, three-candle patterns the most reliable. Perfectly formed patterns are the exception, so when in doubt judge the core idea instead of the textbook shape.
- Do not trade the hammer and inverted hammer in isolation
- Bullish engulfing: the larger the green body, the stronger
- Piercing line only counts above the midpoint of the prior red body
- Morning star and three white soldiers rank at the top, dragonfly doji needs volume
The catch with the morning star and three white soldiers
In the stock market the morning star classically forms through an overnight gap, which barely exists in crypto. Here you judge it by the small middle body and the strength of the third candle. Three white soldiers are often only recognizable once the move has run and the market is overbought.
Sources: TradingFace: Technical and Graphical Analysis, Nison, Morris
Make this lesson interactive
Sign up for free and learn with click exercises right on the chart, quizzes with explanations and saved progress. Then you practice everything risk free on the demo exchange.
100% free, no payment details.